Im going to be buying a home pretty soon and i have a school loan with a balance in the 10 to 15 thousand range. Will lenders let you add that debt to the mortgage loan when i buy a home...if so is it a good idea to do that given the my shcool loan apr is about 7 percent
2007-03-20 08:45:28 · 7 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
I took out my first home loan two years ago and faced the same question. I assume that you will be applying for a loan with zero down payment (in most real estate markets a 20% down payment would be plenty to pay off your student loan). In this case it will be virtually impossible for you to add debt to your mortgage loan. Any reputable lender will loan out a maximum of 100% of the property value. Since loans in excess of 80% of a home's value are subject to mandatory mortgage insurance (significantly increasing your payment), a zero down loan will be structured as a first mortgage equal to 80% of the value (at a standard interest rate) and a second mortgage equal to the remaining 20% (at a higher interest rate). In order to add any additional debt to the loan you would need to purchase the property for significantly less than the appraised value (in your case 10-15 thousand dollars less), which is not likely. Even if you were able to close on a property for such a great price, that 10-15 thousand dollars would become part of your second mortgage (subject to a higher interest rate). I doubt that the terms of your second mortgage would be more favorable than the terms of your student loan, which can be consolidated, deferred, or repaid using numerous different plans. So your best bet will be to keep your student loans separate and to independently arrange the best terms that you can for that loan.
2007-03-20 09:07:14 · answer #1 · answered by eajbuffalo 2 · 0⤊ 0⤋
This should not even be considered.
You would be financing more than the value of the property you are buying. Therefore, if you can even find a lender to do this, you'll have rates in excess of 7% for every penny you now owe. More likely, 8-9% on a 100% first mortgage, and 13-16% for the 2nd mortgage.
Bad idea.
If you can't afford the house without doing this, you can't afford the house.
And student loans are pretty low rates, sometimes tax-deductible, and should almost never be paid off early.
2007-03-20 09:13:41 · answer #2 · answered by Yanswersmonitorsarenazis 5 · 0⤊ 0⤋
No, mortgage loan is a mortgage loan and has to be secured by a property. Of course depending on how much money you you have for a down payment, you could technically put down less and get a larger mortgage loan. But if by doing so you will cause to put down less than 20% then the cost of this will be to high, since PMI kicks in. There is really too many scenarios. If you want give me ALL details I'll be able to come up with more concrete scenario:
1. What is the price of the house
2. How much do you have for a down payment
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Common Jack Tax there is no such thing as MPI, it is PMI and it stands for Private Mortgage Insurance.
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2007-03-20 08:52:22 · answer #3 · answered by Alexander K 3 · 0⤊ 0⤋
I advise leaving your school loan where it is and checking on refinancing it. If you add it (consolidate) to your mortgage loan (which might need to be 15-20K less than appraisal before the lender will consider consolidation) You might force yourself into higher closing costs. Points are based upon actual loan amount as is MPI (Mortgage protection insurance) which you won't need if you are borrowing less than 80% of the actual value of the property.
2007-03-20 08:51:52 · answer #4 · answered by Jack Tax 3 · 0⤊ 1⤋
Typically, lenders will not let you combine the two, your APR is not rediculous, the important thing is to try and make a little more than your scheduled payment to more rapidly pay down your loan. your APR may even be higher your first time around when buying.
Good luck,
Palmer
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2007-03-20 09:45:00 · answer #6 · answered by Anonymous · 0⤊ 0⤋
You sure can. Consolidate and possibly refinance your home. Contact me sometime if you're interested.
2007-03-20 12:46:01 · answer #7 · answered by Phil H 2 · 0⤊ 0⤋
...if you are a Vet. and you have a VA loan...
2007-03-20 08:48:48 · answer #8 · answered by Anonymous · 0⤊ 0⤋