February 2, 2009 - I am currently a student with several student loans out in my name. I have a good credit score but am only able to work part time due to school. I make enough money to cover monthly rent with my boyfriend. We want to get into a house but I fear my loans and low income will make it difficult if not impossible for us.
Responses:
Please follow 2 things:
1. Try your best to put 20% so you don't pay that nasty PMI.
It is not tax deductible, and does not apply towards interest or principal. Like throwing away thousands a year.
2. Don't let the banks bully you into any mortgage that has the words "variable or indexed" interest rates. Stick to 15 or 30 year fixed.
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I understand that feeling you guys are getting the house fever. Unfortunatelly, you are not going to like my suggestion, but I think you guys are not ready to buy a house, because, even with money people may not be ready to purchase a home, in your case you can buy a house with student loans that is not the biggest problem the problem becomes your income, if in the event you buy the house he loses his job who will take care of the mortgage, remember that people that the foreclosed on are the ones that have mortgages.
So my suggestion is, start paying off the loans quickly so that you can spare income for savings, save save and save until you have a big savings account and when you have a full time job then think that you want a mortgage that is comfortable for you to pay in the event that he loses his job, or you guys break up or he passes away. Viceversa he also needs to make sure he can cover the mortgage if you can't.
So you guys want a conventional loan, with a very good down payment enough that you can pay a comfortable mortgage payment and have a life.
This takes time, so be patient.
If you are currently a student, then you should not be in repayment on your Student loans, correct? So here's what I suggest:
Take a copy of your MPN (the Master Promissory Note you signed to get the student loans) and a copy of your current registration. There is a part of the MPN (sorry, I don't have a copy or I would tell you what page), where it states that you are in deferment as long as you are at least a part time student. I would highlight that section, and attach it, along with the registration copy to your home loan application. If you wish you could also write a brief statement of what your educational goal is and how much longer you anticipate being in college.
With that, and a good credit score, the lender may not use the projected payment on your loans when calculating your debt to income ratio.
WHY do you want to buy a house now? Prices are falling nationwide so without knowing EXACTLY where you live, where you would buy, what the LOCAL market is doing; I can't see say if that would be a smart INVESTMENT or not but I can give you a few things to consider.
First, you are a student and do NOT have a full time job so the amount of income you have will make it VERY hard to qualify for a decent house in most parts of the country. Second you have not mentioned your boyfriends income, credit, employment stats, odds of you two getting married, time line until you graduate, prospects of employment in that area or if you will move to a different location after school.
Also you have not mentioned how much emergency funds you have saved, how much you have for a down payment, costs of renting versus owning, your experience in buying property, who you have on your team to help you decide what you can afford, what your local market outlook is for population and job growth which has a direct impact on the prices for single family homes, or your time line for owning the property.
Buying a property is one of the BIGGEST investments you will make in your lifetime so doing it on a part time job while in school with the odds of you NEEDING to move within 4 years for employment is not a great idea in a falling market.
Knowledge Base: Loans
secured loans?
October 19, 2008 - Category: Loans
i have two secured loans on my property and a mortgage, i recently became self employed lately and things are tight money wise at the moment until i build business up but im getting hounded by one of the companys as i have fell a month and a half behind
secured loans »
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