Note: home equity isn't the only reason I'm thinking about buying. I'd like to have control over my own living environment, more space, not have to worry about annoying the apartment unit upstairs if I'm playing music, and real estate in my city is in a very positive trend right now. Home equity is just one factor.
Background: I graduated university roughly 1.5 years ago and have been teaching English in France since. I don't make a lot of money, about $30,000/year gross. I have about $67,000 in student loans at the moment. I am currently on an income-based repayment plan for my loans, resulting in a $0/month payment (so essentially, they're deferred). I'm currently accruing about $1,200 per year in interest based on my loan statements from this year. I have great credit, about a 750 score.
Edit: my primary job is freelance programming, which I am doing in tandem with the teaching position until May 2019, at which point I will go back to full-time (freelance) programming. I’m not worried about paying back my loans yet, as I’m taking this time in France as a “vacation” of sorts, using the teaching position as an excuse to have a long-term visa in Europe.
I'm going to return to the U.S. in May and need a place to live. For the time being I'm going to rent, but let's assume that a loan servicer would give me a home loan for a principal balance of $200,000. Let's also assume my income jumps to $50,000/year gross and that I have no problem managing my money. I'm trying to figure out whether it is wiser to rent and pay off my student loans before buying, or to buy and pay off the mortgage and student loans at the same time.
Using a rough calculator, I'd be paying about $200/month toward the principal of the mortgage, which is more than the interest I'm accruing with my student loans. If I understand the basics of renting vs buying, by renting I may "save money" by not dealing with property tax, maintenance issues, etc., but I'm not accruing any home equity. By buying, even if I'm paying a lot in interest, I would still accrue roughly $200/month in home equity, which would increase over time.
So if my math is right (perhaps it's dead wrong), $200/month in home equity is greater than the $100/month interest accrued from my student loans, and that difference of $100 would increase over time as I pay off more of each loan (and thus have lower interest payments on each). Does it make financial sense to rent and pay off the student loan (and then buy), or buy and pay off the student loan?