Post # 1
Darling Husband just got a job that’s over an hour away from where we live so we’re planning to move as soon as possible. Fortunately since I work from home, my job won’t be affected.
We’re renting right now but since we have to move anyway, I’d really like to get our own house. The problem is that we have about $25,000 in student loans. Our student loans are our only debt though. Our cars are paid for and our credit card balance is at zero. Darling Husband thinks we should keep renting until we can pay off our student loans and save up a large sum of money for a downpayment for a house. He’s a very frugal/practical guy by the way.
I just wondered what your thoughts are. Have any of you bought a house while still paying off student loans? I really hate the idea of throwing away money into rent every month. Not to mention Darling Husband wants to rent a place that’s even smaller than what we have now in order to pay less rent and save up money. He wants to move into a 2 bedroom townhouse…even if it’s the financially responsible thing to do, it makes me want to cry. 🙁
Post # 3
Student loan debt is expected. As long as you pay it they don’t interfere with a mortgage. We both have them.
Post # 4
Yep. I’ve got student loans (though Darling Husband doesn’t)…the bank just factors in your debt to determine how much they will loan you for a mortgage. I’d say you guys are in good shape with no credit card or car debts!
Post # 5
I would never put off a home purchase for student loans assuming they are not some crazy high interest ones.
There are tax advantages to owning a home and assuming you qualitify, you also get them with the interest you pay on student loans.
Also, for loans like mine where the interest rate is super low, it doesnt make financial sense to pay them off early because of time value of money and lost investment opportunity by outlaying the cash to pay them off. And that money works harder for me in a house.
However, I do not think I would buy a house if I didnt have the 20% down because of PMI.
Post # 6
@As_You_Wish: We bought our house with just over $20,000 in student loans. Student loan debt, and mortgage debt, are “good” debt, so the mortgage company/bank doesn’t look down on it.
I think if you can make your mortgage payments AND pay a reasonable amount towards your loan every month than it makes sense to buy. You need to consider all of the variables.
a) Given the amount of money you have for a down payment, how much will you have to pay towards your mortgage – how much interest would you be paying over the life of your mortgage VS the amount of interest you’d pay if you saved up a larger down payment.
b) Given the amount of money you are paying towards your loan, how much interest will you have paid over the time it takes to pay it off.
c) How much rent are you throwing away each month.
If you can continue to pay your loan down at the same rate you are now, AND if the added interest on your mortgage with the smaller down payment is not an excessive amount more than the rent you are throwing away each month, you should buy. Especially with interest rates low and if the housing market in your area is a buyers market.
Remember, owning a home also builds equity, which should be considered, too.
Post # 7
- Wedding: March 2013 - Callanwolde Fine Arts Center
We bought our home last year and my Darling Husband has student loans. It didn’t really seem to negatively impact us at all.
If you can afford the cost of home ownership and your normal bills, I would definitely recommend buying a house instead of renting.
Post # 8
As long as you are able to make your student loan payments in addition to your mortgage, I don’t see any sense in holding off besides to save for a down payment.
Student loan debt isn’t something you can be like “Okay, if don’t go out to eat at all this month, I can pay it off!”. You’re in it for the long haul and should plan your life as such.
Fiance and I want to stop renting, but we can’t really jump on a house until I know where I will be working in 2 years.
Post # 9
I don’t think you should hold off on buying a house just for the simple fact of having student loans. However not everyone is comfortable with having any debt and it sounds like your Darling Husband is one of them. There’s no reason you can’t technically buy a house with loans.
Things that should be a factor though is, how high are the payments and will they affect your ability to pay bills when you buy a house, how much savings do you have for a down payment? Can you get qualified for the amount you want with that loan on your credit? Buying a house is a HUGE expense. You can probably expect to have all of your utilities and bills triple. Not to mention the spending money you now suddenly spend on tons of house accessories, decorating, organizing, cleaning etc… Plus doing your own maintenance and fixing of things. It’s a lot to think about, and if you are going from a small place to a big house, you’ll want an extra cushion in savings for things like furniture and paint etc… So it’s a big decision. I don’t blame him for wanting to save up more.
Then again, if you have 50k in the bank, and a 25k loan, you should absolutely 100% be paying that loan off asap. Wether you then go and continue to save before buying is entirely up to you guys but if you can afford to pay it off you should, you’re just paying the gov’t what, 6.3% these days or so in interest? GAK
ETA: When I say “Can you get qualified for the amount you want with that loan on your credit?” I don’t mean that you won’t get qualified because of a student loan, you absolutely will (assuming everything else is peachy), it’s just that every bit of debt you have, takes away from the amount of debt they will let you take out for a mortgage, which obviously then reduces how much house you can buy. This may or may not matter for you.
Post # 10
As long as you can pay your loans, mortgage, and other living expenses then it’s not a problem. I bought a house with $150k in student loan debt.
Post # 11
- Wedding: October 2011 - Bed & Breakfast
Student loans, in and of themselves, are not a barrier to home ownership. The bank will look at your debt-to-income ratio (how much you owe per month vs how much you take home per month). They will also look at your available funds. How muchh do you have for a down payment? How much do you have for closing costs? And how much cash reserves will you have left over after the down payment and closing costs are paid? They will also look at your credit worthiness and job histories to assure that you are not a high risk.
Post # 12
@As_You_Wish: My husband and I purchased a home with way more than $25k in student loan debt, a car payment, and a little credit card debt (very minimal on the credit card). Google “debt to income ratio” – that’s what the bank uses to determine if you are eligible for a mortgage loan. We were told that a typical person has around 30-35% debt/income ratio. Your debt doesn’t seem like very much but I guess it depends on what your income is. I’m sure you’ll be fine though! You can even find calculators online to help determine that debt/income ratio. (note: your new mortgage would be figured in as debt, too).
The housing market is expected to take off within the next year. With that, the interest rates on mortgages are expected to rise (again). For us, it made more sense to purchase when houses were less expensive and when we could get a lower interest rate. Our mortgage broker told us that when she first started in the business, people were refinancing to get 6-7% interest rates. They thought that was a great deal because the former interest rates were anywhere from 17-20%. We locked in at 3.37%! Right now is a fantastic time to buy if you foresee longevity in the community which you intend to live.
Additionally, I felt that our mortgage broker was incredibly helpful, nice, and patient. She wanted us to ask as many questions as we could think of. I think just talking to her for the first hour made us understand the process 100x better! Maybe you could call your local bank and speak with someone, even! It doesn’t cost anything to get educated on it! 🙂 Best of luck.
Post # 13
I think you should get a house. Renting is a waste of money. The bank will just factor in your student loan debt and that will affect how much you are approved for.
I know many people with student loans that have bought houses and it’s been fine.
Post # 14
Darling Husband went to law school, so yeah, we’ve got student loans… and we are looking to buy. It shouldn’t matter as long as it’s all manageable and you’re buying what you can afford!
Post # 15
The thing is that we don’t have a down payment saved because Darling Husband puts all of our extra money towards paying off student loans :S. We have a line of credit with a low interest rate but I’m not sure if it would be wise to use that for a down payment.
A couple weeks ago we looked at a house that we both fell in love with. We were actually looking at it because it was for rent but the owner told us he’d prefer to sell it. He even mentioned that he might be willing to let us rent to own. At first Darling Husband was on board with that and then he back-peddled on the idea. His reasoning is that such a small percentage of our rent would go towards the down payment that it wouldn’t be worth it. We’re still in the running for that house but someone else put in an offer since we looked at it. We’ll know by tomorrow if it was accepted or not.
Btw, our student loan payments are about $350 a month but Darling Husband likes to pay more than the minimum payment.
Post # 16
@As_You_Wish: Ummm Fiance and I have close to $90,000 in student loans between the 2 of us and we just bought our first house 2 months ago. We are hoping to have our student loans paid off before we have kids (3-4 yrs) but before then we will both need new cars so we will be in debt for a decent portion of our lives. But we both have good jobs and in our area that’s just kind of the “norm”. I would say we will prob be debt free by the time we are 40ish. 🙂