Post # 1
We are thinking about paying off my student loan which has a ridiculous interest rate, but we are also in the process of finding and buying a house. Would paying off a large amount $11k affect the ability to be approved for a mortgage. We’ve been pre-approved already. I know you’re not supposed to make large purchases, but I don’t know about debt like this.
Post # 3
What are your monthly payments and what is the interest rate? I’d probably talk to the mortgage people to see what they say. They may be concerned that suddenly a very large amount of money is gone, or they may be happy some debt is gone. $11k really isn’t very much in terms of student loan debt, and I’d be willing to bet they’d prefer you just keep making the payments to keep some money in the bank.
Post # 4
From what I understand, any large purchases – even paying off debts – can hurt you until the loan actually closes.
Post # 5
@SquidWeds: Monthly it’s about $100 with a 9.5% interest rate.
Post # 6
Darling Husband and I bouhgt our house while paying our students loan. Neither of us put a huge chunk in them. Just kept paying the monthly on time. Student loans are almost synonymous with debt. Banks expect them.
Post # 7
They care about your monthly debt obligation, $100 is nothing. You’re better off being about to show you have 11k in available cash.
Post # 8
- Wedding: January 2013 - Harbourfront Grand Hall
@Jw1724: DH has about the same amount in student loan debt and it didn’t affect our mortgage, but we weren’t looking for a huge amount for the home loan.
Might want to save some spare money for moving expenses and other costs associated with your new home!
Post # 9
Honestly, if your total monthly payment is about $100 I’d probably recommend not paying it off all at once anyway unless you have a lot more money lying around. Unexpected expenses can wreck you if you don’t have solid savings, and that $11k might really save you someday.
Post # 10
if you have been pre approved; I wouldnt worry too much about them.
as stated above lenders do no view total amount owed but monthly payment and if you have missed a payment. A big no-no.
federal student loans are a great way to establish credit…almost considered good debt. since depending on your income you may also write off interest paid. (consult your accountant or HR block type)
the interest sounds on the high end, so you may have a private student loan. if your student loan portfolio is mixed, a future strategy may include focusing on paying off the private 1st or any credit card type of debt. always tackle high interest 1st.
congrats! all my best.
Post # 11
You will need to keep a rock solid paper trail, as the bank is going to freak out that $11,000 is exiting your account without being seasoned (ie without it having happened 3 months before the process started). I would honestly call your loan rep and ask them what they think. If you are dipping into the 6 month fund they want to see, for example, you could be jeopardizing your loan eligibility.
Post # 12
As long as you have been paying all of your student loans on time, the lender doesn’t care. It’s “good debt”. My finance guy told us “right now, cash is king”. Keep all the cash you can in your account and don’t do anything drastic.
I know the debt is annoying, just try to ignore it for a little longer 🙂