[TimoDass]

So I have an idea to do something with my student loan money. It is to buy a house!

I already have quiet a bit saved up for a house. As it currently stands would make a very nice down payment.


After I graudate, if I get on full time where I am currently working, I will be making a minimum of $60k/yr before taxes if I get the same job or close to it. Our plan is to buy a house after graduation. We will have even more money saved up by then in savings. If everything goes well, another $25k.


Now I have ~2.5 years left in school. I am not totally sure how the student loan thing works. As it stands, i think that I get $10k/semester. Half of it is subsidized. So when I graduate I could have $30~$50k worth of student loan money.

If we end up buying a house on the low end of our budget, we would be able to pay in cash all from savings and student loan money. If we go towards the higher end, we would get a mortgage anywhere from 1/4 to 1/2 the cost of the house.


So with the help of the student loans, it would either have us pay our house in cold cash, or beable to help us take out a much smaller mortgage.



Benefits that I see are:
- Can easily defer payments if anything ever happened.
- I won't be tied to a bank, or at least will have a smaller mortgage and mortgage payment that can be paid off faster.
- If I am not tied to a bank, I don't ever have to worry about lossing my house if anything happened.
- Student loan payment is only 10% of income, so monthly minimum payments would be less (not that I would pay the minimum, just a incase anything happened I wont have a $1,000/mo house bill).

Cons that I see are:
-Unsubsized loans = interest adding up while in school (slightly offset being invested, or could be completed offset)
-interest rate might end up being higher than a mortgage rate.
-Don't know a whole heck of a lot about mortgages and student loans.



So, how dumb is this idea? From 1 to 10, an 8?

[Badyalectlawl]

I have yet to find a student that didn't need all of their student loans just to live but off the top of my head I can't think of any other problems with it.

[TimoDass]

I have yet to find a student that didn't need all of their student loans just to live but off the top of my head I can't think of any other problems with it.

Well today you found one. I get enough pell grant to cover more than 100% of the cost. Plus if I didn't have Pell Grant or enough Pell Grant, I make enough to pay for school with cash. Still be at least a 12hr student. My school only costs $3.3k for 12hours. So pretty cheap.

My idea seems good in my brain, but I just don't know if it is crazy, dumb, whatever. I just don't want to get bit in the a$$ if I go through with this idea.
I have only talked to my borther about it. He said he had some flex interest on his loan and you could lock it in. Said he locked it in at almost 3% which is prett dang good. Though I am unsure of the current interest rate and how the current rates work/adjust.

[Badyalectlawl]

Well today you found one. I get enough pell grant to cover more than 100% of the cost. Plus if I didn't have Pell Grant or enough Pell Grant, I make enough to pay for school with cash. Still be at least a 12hr student. My school only costs $3.3k for 12hours. So pretty cheap.

My idea seems good in my brain, but I just don't know if it is crazy, dumb, whatever. I just don't want to get bit in the a$$ if I go through with this idea.
I have only talked to my borther about it. He said he had some flex interest on his loan and you could lock it in. Said he locked it in at almost 3% which is prett dang good. Though I am unsure of the current interest rate and how the current rates work/adjust.

I know a couple of people that have bought houses at uni and paid the mortgage by renting out rooms to other students so it's not completely insane. I'd look into it more though. What happens if you suddenly need 10k for school supplies and you've spent all of your student loans?

[TimoDass]

Well, I don't plan on buying a house while in school. So I will still have the money, just take a few days until I can get it turned into cash.
Plus I always have a few grand cash in my safe if I ever need money asap and replenished asap if used.

Buying a house and renting out rooms now would be a fantastic idea if I was still without a family.

[LeviBrawn]

how much are you looking at spending?

[TimoDass]

With what I currently make, $100k on the low end, ~$200k on the high end. If I get on as an employee instead of a contractor where I work after I graduate this could increase if we find something we really like that isn't much more.

[emexiagog]

What's a better idea is not taking out more than you need in student loans.
Did you even bother to read the website??

[TimoDass]

What's a better idea is not taking out more than you need in student loans.
Did you even bother to read the website??

You might be the only one.

What is a better idea is use that money that will best benefit me. If it is better then getting a mortgage or helps supplement one, that is in my best interest.
If it isn't a good idea, then I won't touch a penny of it.

[krasniyluch]

I think your eligibility for loans is partly based on how much money you have saved in the bank. If you take out a 10k loan and just sit on it, next year when you fill out your FAFSA and say that you have 10k in the bank, you probably won't get a pell grant, and you probably won't be eligible for a loan.

Just guessing. I have no idea what its like to have money.

[viagraman]

As you're considering a loan, it'll need to be paid back - how do the interest rates compare for the loan Vs a mortgage?
When you talk to the bank, they may see the loan as an outstanding dept and it may affect your mortgage rates.
You may wish to 'restructure' things so you're 'living on' the loan and putting your earnings in a savings account for the house.
However, while generally I hate the idea of owing money on a loan that's chewing up interest, it may well work for you.

[TimoDass]

I think your eligibility for loans is partly based on how much money you have saved in the bank. If you take out a 10k loan and just sit on it, next year when you fill out your FAFSA and say that you have 10k in the bank, you probably won't get a pell grant, and you probably won't be eligible for a loan.

Just guessing. I have no idea what its like to have money.

Yeah, I can't remember what they ask about when it comes to money. Cause I have a bit saved up already. I can see that though.
Though there are ways around that. Hold the money as cash. Put it it in an account under a different name.

As you're considering a loan, it'll need to be paid back - how do the interest rates compare for the loan Vs a mortgage?
When you talk to the bank, they may see the loan as an outstanding dept and it may affect your mortgage rates.
You may wish to 'restructure' things so you're 'living on' the loan and putting your earnings in a savings account for the house.
However, while generally I hate the idea of owing money on a loan that's chewing up interest, it may well work for you.

That does pose an issue. Higher rates, may not get as much money as needed. I have been told that the bank looks at your debt to income ratio, and if I have a lot of debt from student loans, I could even get disqulified with how strict things are now. If it was before the bubble popped I wouldn't have needed to worry about anything. Though a cosigner should be able to help out a lot especially if they have awesome credit right? cause I can easily have this happen.

Usually with a loan you get it and spend it. But I would be getting it and reinvesting it where I can off-set some interest or maybe, hopefully, gain money off it.

[enfoires]

I would like to say that it is a bad idea to bind you at one spot, but considering the prices and the negotiation potential right now, it may be a good idea.

[DoctorDulitlBest]

For those who have finished up college, did you go into debt to get through college?

For those of you who are still in college, or about to be in college, by the time you graduate do your finical projections look like you will be in debt?


As for me, Im currently a Junior. It seems that I will make it unscathed past the debt man. Crossing my fingers though. I still could possible collect a few grand in debt in my last year, but so far it seems like I will be debt free, but cutting it close. Really just depends if I will keep getting the tax returns I have been getting or not, and/or income picks up, which I highly doubt with me going to school full time.

[rolleyes]
What, you need one?



Why do you keep insisting I have student loans?
Do you not know what a lease is?

I am proudly debt free and plan on staying that way. [yes]

[help]

[TimoDass]

So you do need a loan?

[LeviBrawn]

What are you paying in rent now?

[k1ePRlda]

[DoctorDulitlBest]

[infarrelisam]

The bank takes a look at the property you want to purchase, checks your credit, calculates living costs/mortgage, then looks up any other loans/credit cards and if you owe money there then they add it up to calculate monthly cost. Then they look at how much you have to put down and how much you make. When I applied for a loan they told me I had to pay off my car loan or they wouldn't give me the loan. Then again I have no idea how easy it is to get an FHA loan. I got a conventional loan, I had about 20% to put down but since it was a conventional loan they forced me to put 30% down and pay off the car or they would reject me.

I was approved for a much much higher loan but my condo fee prevented me from reaching that approved loan amount. Living in the cit with 800-1200 dollar condo fees ftw.

Personally I wouldn't buy a house yet if I were you. I would graduate, save, and get the job first then look for a home. In your neck of the woods house prices don't fluctuate as much as they do in the Big cities like here in DC or Los Angeles. Plus pre recession level prices in areas outside of the city wont be seen for a good while (hopefully never). Right now in the big cities its a good time to buy.

I scored a 550k condo for 280 >

[TimoDass]

What are you paying in rent now?

$300/mo.

The bank takes a look at the property you want to purchase, checks your credit, calculates living costs/mortgage, then looks up any other loans/credit cards and if you owe money there then they add it up to calculate monthly cost. Then they look at how much you have to put down and how much you make. When I applied for a loan they told me I had to pay off my car loan or they wouldn't give me the loan. Then again I have no idea how easy it is to get an FHA loan. I got a conventional loan, I had about 20% to put down but since it was a conventional loan they forced me to put 30% down and pay off the car or they would reject me.

Yeah, we went to some open houses a while back just for something to do. The sales lady said do not by a car because you will be disqualified just from that on getting a mortgage.
My mom said that she will be the loan holder for us if it benefits us. Her crediting rating is like perfect and if I do take these student loans, Ill have a lot of debt that they will be looking at, but the only debt as well. Though the fata$$ downpayment I would be making might be making up for the debt they see?

Personally I wouldn't buy a house yet if I were you. I would graduate, save, and get the job first then look for a home. In your neck of the woods house prices don't fluctuate as much as they do in the Big cities like here in DC or Los Angeles. Plus pre recession level prices in areas outside of the city wont be seen for a good while (hopefully never). Right now in the big cities its a good time to buy. Well that is the plan. Buy a house after I graduate. I currently have the job. If I was full time I'd be at $40k/yr before taxes. After the job I have a great chance of becoming an employee instead of a contractor.
The price segment that we are looking at has been pretty strong segment. Hasn't dropped much. You have to up the price a lot to really find the steals. Though even in the cheap segments, in town or outside of town, foreclosures are a steal around here.
There was actually a short sale last year we wanted to buy. 15acres, half of it on a hill side, 3story house, with a pond sold for $200k. Also has a place on top of the hill to build another house. Maybe in 3years it'll go back up for sale. Awesome piece of property with a pretty cool house design and layout. One of those funky and cool 1980 designs.