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Anybody roll student loans into their mortgage?

D

DisgruntledVirus

Lifer
I was talking with my parents about my student loans and plans after graduation. I've secured a decent paying starting job, and was planning on saving to throw a chunk of money at them upon graduation to lower monthly payments. My parents suggested looking into buying a "starter home" and rolling student loans into it. This concerns me as it increases the amount it's upside down in the mortgage. I'm trying to do as much research into this as possible and would appreciate any insight anybody has.

Core information for the time when I would be buying:
$12-15k down
Looking at ~$80k house with ~$125k loan
$40k student loans
No current car payment (or other debt)
Lowish credit score (don't know score, guessing it's 600-700 range though... I would find this out. I realize this is low, but I made some bad decisions a few years ago that are affecting this).
Have low $40k/yr job
Net after taxes and other expenses but before rent/util ~$1500/mo (Since I know there will be questions about this as it should be higher based on salary, that's taking out a car payment and insurance as well along with some other more "fixed" expenses like cell phone)
 
Student loans are typically backed by the US government, aren't they? This is why student loans typically have a low interest rate, the government takes the risk.

Your home loan will probably have a higher interest rate than your student loan.

What is the interest rate of your student loan and what interest rate are you expecting to receive for your home loan?
 
DisgruntledVirus said:
I was talking with my parents about my student loans and plans after graduation. I've secured a decent paying starting job, and was planning on saving to throw a chunk of money at them upon graduation to lower monthly payments. My parents suggested looking into buying a "starter home" and rolling student loans into it. This concerns me as it increases the amount it's upside down in the mortgage. I'm trying to do as much research into this as possible and would appreciate any insight anybody has.

Core information for the time when I would be buying:
$12-15k down
Looking at ~$80k house with ~$125k loan
$40k student loans
No current car payment (or other debt)
Lowish credit score (don't know score, guessing it's 600-700 range though... I would find this out. I realize this is low, but I made some bad decisions a few years ago that are affecting this).
Have low $40k/yr job
Net after taxes and other expenses but before rent/util ~$1500/mo (Since I know there will be questions about this as it should be higher based on salary, that's taking out a car payment and insurance as well along with some other more "fixed" expenses like cell phone)
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It doesn't work this way. At all.
 
chusteczka said:
This is why student loans typically have a low interest rate, the government takes the risk.
Click to expand...

What?! My federal student loans are 6.75%. The rate is horrible.

And it seems like student loan consolidation resulting in lower interest is a thing of the past. They have an algorithm now where they take a weighted average of your interest rates and round to the nearest 0.5%. My consolidated rate would actually go up to 7%.
 
Leros said:
What?! My federal student loans are 6.75%. The rate is horrible.

And it seems like student loan consolidation resulting in lower interest is a thing of the past. They have an algorithm now where they take a weighted average of your interest rates and round to the nearest 0.5%. My consolidated rate would actually go up to 7%.
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Lol you got screwed.
 
Nintendesert said:
Lol you got screwed.
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That's the federal rate. Its gone up a lot recently. I have good enough credit to get a <2% interest rate on an auto loan and I still can't find a place willing to give me a reasonable consolidation on my student loans.
 
Sounds like you want to be even deeper in debt than you already are. Not a good idea and if you cant pay up, your credit score is fucked.
 
At that salary, you would likely be better renting than trying to buy a house. Houses come with other expenses than just mortgage. You'll have a tough time paying the mortgage, utilities, food, etc and still save enough to cover house repairs.

If you rent a place and get a roommate or two, you can focus on saving a larger house downpayment and/or paying off your student loans faster.

I've never heard of rolling those loans into your home mortgage. If you can, I'd recommend avoiding that. Being that far underwater on a house limits your mobility.
 
So when you default on your mortgage the taxpayers can bail you out of your home AND student loan obligations..?

Sounds like a good plan OP.
 
DAGTA said:
At that salary, you would likely be better renting than trying to buy a house. Houses come with other expenses than just mortgage. You'll have a tough time paying the mortgage, utilities, food, etc and still save enough to cover house repairs.

If you rent a place and get a roommate or two, you can focus on saving a larger house downpayment and/or paying off your student loans faster.

I've never heard of rolling those loans into your home mortgage. If you can, I'd recommend avoiding that. Being that far underwater on a house limits your mobility.
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Depends on the market. Before Phoenix got hijacked by "investors," you could buy a house and have a ~$600 mortgage/tax/insurance payment vs renting a comparable property at $900-1200/mo.
 
Dont try anything funky like that, just get a mortgage all normal like. Shouldn't be a problem getting that low a loan with big money down and a decentish credit score. If it's low because of a collection and maxed out credit cards or something though, it might be tougher though. FHA maybe if it's that bad
 
150% Loan to Value is impossible.

Also, based on what little you've told us about your parents already I would urge you to stop listening to their recommendations on finances immediately. The fact that they don't even know as parents that what they recommend is completely impossible is evidence enough. I know they are your parents, love them, etc. but they don't know anything about money and their advice will do you wrong.

$40k student loan on a $40k income you need to focus on paying them off. I'd rent a small apartment at the most. Homes are a terrible investment; a terrible way to gain equity or net worth. More or less the only times historically this isn't true is when housing is in the middle of a bubble. Don't for a second think you need a house--indeed, you don't. I have a home and there is never a lack of things to throw money into.
 
Well first off would be looking at homes that were in foreclosure or otherwise below what they appraised at. Secondly, wouldn't the down payment help offset the increase from the student loan addition?

And I don't know jack about buying homes or anything to do with it. Hence why I'm asking. I thought it was strange when it was suggested to me, so I am trying to do more research before doing anything. I have no interest in fucking my own life up later on because I did a stupid thing when I was younger. However if there is a way to help get me in a better financial position in the future then I want to do that.

Also, I already had planned on a roommate. But instead of splitting the bills for a rented unit, if I could afford a house on my own then that seems the wiser choice (as if the roommate left then I would still be able to afford it on my own).
 
Doppel said:
150% Loan to Value is impossible.

Also, based on what little you've told us about your parents already I would urge you to stop listening to their recommendations on finances immediately. The fact that they don't even know as parents that what they recommend is completely impossible is evidence enough. I know they are your parents, love them, etc. but they don't know anything about money and their advice will do you wrong.

$40k student loan on a $40k income you need to focus on paying them off. I'd rent a small apartment at the most. Homes are a terrible investment; a terrible way to gain equity or net worth. More or less the only times historically this isn't true is when housing is in the middle of a bubble. Don't for a second think you need a house--indeed, you don't. I have a home and there is never a lack of things to throw money into.
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My parents don't know my complete financial status. They know around what I make and think I have less student loans than I actually do. They also were not saying I *should* do it, just something that I should look in to potentially doing.
 
Bigger down payment helps but these days you're unlikely to get over 100% unless perfect credit. Just keep the student loans, they shouldn't be a big problem getting a standard mortgage unless they're a big % of your monthly income.
 
yh125d said:
Bigger down payment helps but these days you're unlikely to get over 100% unless perfect credit. Just keep the student loans, they shouldn't be a big problem getting a standard mortgage unless they're a big % of your monthly income.
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No one exceeds 100% LTV, this isn't the 90s.
 
I wouldn't take on a 200K mortgage (mortgage +student loan) on your income.

You basically want to get a loan that is less than 6.8% (student loan interest). What are private loans charging nowadays?

Some other options:

- if you have a federal job, your loan will be forgiven after 10 years (google PSLF)
- if you REALLY want to, take out a 401k loan (rate should be around 4%) to pay your student loan. BUT if you lose your job, you HAVE to pay back your 401k loan
 
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