OT: Paying off student loans...credit impact / hurting my ability to get a mortgage?

[4Rings6Stars]

You fine folks have never steered me wrong. You might remember a thread from a few months ago where I asked about buying a fixer upper or a move in ready house... along that same vein, I have a question about personal finances.

First question:
You guys are great...but who should I be going to to talk about this stuff? Family type financial advisor? I have it in my head that these people will just try to sell me insurance I don't need and convince me to invest in funds that benefit them.

My scenario:

Between my wife and I we have a decent amount of student loans dating back to 2008-2013. Rates are between 4.5% and 6.6%. Since I started working in early 2013, we have been frugal and have saved a good amount towards a down payment.

I have a few times wondered if I should pay off the student loans first but have talked myself out of it as I didn't want to lose the ability to buy a house if the right place came along. It's constantly nagging at me though as we essentially have enough cash in the bank to pay off the loans. A few months ago, I decided to pay off a few of the higher rate loans (total of about 10k). It felt great. I convinced myself that I would pay off all / most of the loans and that I would still be able to get a decent mortgage even without a 20% payment and that PMI would be less than I was paying in interest on my loans. Before I could do so, my credit monitoring app alerted me that my score had dropped 18 points! I investigated and found that it was most likely caused by the impact paying off the loans had on my "age of credit history" as nothing else had changed, no late payments, etc.

Seems crazy that paying off these loans will hurt my credit score and my ability to get a new loan...but I guess that's how the formulas work.

Any insight on this? I'm now thinking it's best to just sit on the cash until I'm ready to buy a house and then pay off the loans as fast as I can once I have the mortgage. I have never had a car loan or anything, so besides credit cards, the student loans are really my only credit history. Another 18 point drop to my score would not be good!

[nicrump]

im likely to get smacked down by the "experts" here but truth is the system is rigged to keep you paying interest. don't fall for the system. don't carry debt other than a mortgage IMO. pay off those loans and build the saving back to a better than 20% down plus extra cause you will want to spend a pile of cash on all the new things you need in first time home ownership. another trap people fall into is running up CCs on all that new house stuff.

[54ny77]

it's not the loans in & of themselves that matter, it's your debt to income (dti) ratio once you get a mortgage.

assuming both you & wife will be on mortgage, add up all your combined monthly debt payments, which includes credit cards, student loans, car loans/lease, any other recurring monthly debt, and then the mortgage (which is principal, interest, taxes and insurance). then divide by your household gross monthly income (pre-tax).

if that number is greater than 36%, you need to pay off those debts that impact your dti ratio (or look for a higher paying job!).

a hypothetical example:
total monthly debt obligations: $2,800
total gross income: $5,150
math: $2,800 divided by $5,150 = 54% dti
that's bad.

in that scenario, you'd need to find ~$1,000 in recurring monthly savings to get down to 36% dti. while you can get loans up to 45% dti, that requires reserves and so forth, beyond the scope of this basic answer.

long story short, target your total monthly debt to be no more than 36% of your gross income. that way you'll have a better time qualifying for a mortgage.

that aside, if you have sufficient cash, pay off the student loans. by paying off, you're "earning" a rate of return equivalent to what you'd otherwise be paying on those loans, i.e., you no longer have the liability. there's tremendous psychological value to that.

You fine folks have never steered me wrong. You might remember a thread from a few months ago where I asked about buying a fixer upper or a move in ready house... along that same vein, I have a question about personal finances.

First question:
You guys are great...but who should I be going to to talk about this stuff? Family type financial advisor? I have it in my head that these people will just try to sell me insurance I don't need and convince me to investment in funds that benefit them.

My scenario:

Between my wife and I we have a decent amount of student loans dating back to 2008-2013. Rates are between 4.5% and 6.6%. Since I started working in early 2013, we have been frugal and have saved a good amount towards a down payment.

I have a few times wondered if I should pay off the student loans first but have talked myself out of it as I didn't want to lose the ability to buy a house if the right place came along. It's constantly nagging at me though as we essentially have enough cash in the bank to pay off the loans. A few months ago, I decided to pay off a few of the higher rate loans (total of about 10k). It felt great. I convinced myself that I would pay off all / most of the loans and that I would still be able to get a decent mortgage even without a 20% payment and that PMI would be less than I was paying in interest on my loans. Before I could do so, my credit monitoring app alerted me that my score had dropped 18 points! I investigated and found that it was most likely caused by the impact paying off the loans had on my "age of credit history" as nothing else had changed, no late payments, etc.

Seems crazy that paying off these loans will hurt my credit score and my ability to get a new loan...but I guess that's how the formulas work.

Any insight on this? I'm now thinking it's best to just sit on the cash until I'm ready to buy a house and then pay off the loans as fast as I can once I have the mortgage. I have never had a car loan or anything, so besides credit cards, the student loans are really my only credit history. Another 18 point drop to my score would not be good!

[45K10]

im likely to get smacked down by the "experts" here but truth is the system is rigged to keep you paying interest. don't fall for the system. don't carry debt other than a mortgage IMO. pay off those loans and build the saving back to a better than 20% down plus extra cause you will need spend a pile of cash on all the new things you need in first time home ownership. another trap people fall into is running up CCs on all that new house stuff.

Agreed, I quit playing the borrowing money game about 10 years and haven't looked back. The wife and I have never had student loans, so I can't advise you on that, but we don't owe money on anything (car, etc.). We have a contract on a house right now, we are putting 20% down and have banks falling over us to give us a loan. My advice is to get rid of the debt then save enough for a 20% down payment and never ever borrow money again. I know that is easier said than done but it is possible even with kids.

Good luck!

[yngpunk]

You fine folks have never steered me wrong. You might remember a thread from a few months ago where I asked about buying a fixer upper or a move in ready house... along that same vein, I have a question about personal finances.

First question:
You guys are great...but who should I be going to to talk about this stuff? Family type financial advisor? I have it in my head that these people will just try to sell me insurance I don't need and convince me to invest in funds that benefit them.

My scenario:

Between my wife and I we have a decent amount of student loans dating back to 2008-2013. Rates are between 4.5% and 6.6%. Since I started working in early 2013, we have been frugal and have saved a good amount towards a down payment.

I have a few times wondered if I should pay off the student loans first but have talked myself out of it as I didn't want to lose the ability to buy a house if the right place came along. It's constantly nagging at me though as we essentially have enough cash in the bank to pay off the loans. A few months ago, I decided to pay off a few of the higher rate loans (total of about 10k). It felt great. I convinced myself that I would pay off all / most of the loans and that I would still be able to get a decent mortgage even without a 20% payment and that PMI would be less than I was paying in interest on my loans. Before I could do so, my credit monitoring app alerted me that my score had dropped 18 points! I investigated and found that it was most likely caused by the impact paying off the loans had on my "age of credit history" as nothing else had changed, no late payments, etc.

Seems crazy that paying off these loans will hurt my credit score and my ability to get a new loan...but I guess that's how the formulas work.

Any insight on this? I'm now thinking it's best to just sit on the cash until I'm ready to buy a house and then pay off the loans as fast as I can once I have the mortgage. I have never had a car loan or anything, so besides credit cards, the student loans are really my only credit history. Another 18 point drop to my score would not be good!

A couple of thoughts...

1) Don't know your income level, but suspect that your student loan interest is deductible on your taxes, so might want to take that into consideration when debating to pay off the loan vs. investing the money

2) Have you looked into consolidating your loans into a single loan at a lower interest rate?

3) Depending on how good your credit is, I wouldn't worry about an 18 point drop in your credit score. Besides, any mortgage lender (esp. in today's lending environment) is going to look closer at your credit history vs. just your score.

[thirdgenbird]

I'm only a few years ahead of you and I can tell you that paying off our student loans was the best thing we did. For peace of mind if nothing more. We lived cheap. Cheap apartment, no eating out, no driving on the weekends, no tv, we shared internet with two other tenants of the apartment and had no other loans or debt. All of my wife' s income and part of mine went directly to loans.

I did end up buying a house prior to completely paying them, but it was a perfect storm. i live in a very competitive market for "average" homes but the perfect house was available, the market was the lowest I had see it and interest rates were at like an 80 year low. funds I intended to use to pay off the loan were redirected to buying the house but our learned frugalness and a pay raise allowed us to pay off the student loans shortly after buying the house.

The only thing we pay interest on now is our house and if needed, could survive on minimum wage plus savings for quite a while. It's a good feeling.

[fuzzalow]

There are lots of things the bank looks at: what & where the property is (because that is their underlying collateral on the loan) and your other financial assets (stocks, bonds, investment portfolio, etc) that mitigate the bank's risk exposure to the loan.

54ny77 has the simple rule correct: Debt-to-Income ratio is an easy barometer. But it is only one piece.

The Credit score fluctuations don't mean anything - they change slightly with each inquiry or change to your credit history but will in a month of two stabilize to your former historical rank assuming no other changes.

It doesn't really matter what the rate on your loans is, it is the total amount of your indebtedness.

I don't know how banks handle loan risk these days as my financial picture is different than yours. I'd guess if they don't see enough down payment they might not view that as enough skin in the game on your part and they will increase your loan cost to compensate them for your higher risk profile - if they offer a loan at all.

NEVER carry ongoing, recurring credit card debt. It is the purest indication of spending habits above income generation any institution ever needs to see. Free use of unsecured consumer debt is the temptation that disqualifies people from building any financial foundation - always pay the credit card bill in full each month or learn to spend less or earn more income. It is that simple.

[4Rings6Stars]

it's not the loans in & of themselves that matter, it's your debt to income (dti) ratio once you get a mortgage.

assuming both you & wife will be on mortgage, add up all your combined monthly debt payments, which includes credit cards, student loans, car loans/lease, any other recurring monthly debt, and then the mortgage (which is principal, interest, taxes and insurance). then divide by your household gross monthly income (pre-tax).

if that number is greater than 36%, you need to pay off those debts that impact your dti ratio (or look for a higher paying job!).

a hypothetical example:
total monthly debt obligations: $2,800
total gross income: $5,150
math: $2,800 divided by $5,150 = 54% dti
that's bad.

in that scenario, you'd need to find ~$1,000 in recurring monthly savings to get down to 36% dti. while you can get loans up to 45% dti, that requires reserves and so forth, beyond the scope of this basic answer.

long story short, target your total monthly debt to be no more than 36% of your gross income. that way you'll have a better time qualifying for a mortgage.

that aside, if you have sufficient cash, pay off the student loans. by paying off, you're "earning" a rate of return equivalent to what you'd otherwise be paying on those loans, i.e., you no longer have the liability. there's tremendous psychological value to that.

Interesting and very helpful.

I just checked my budget spreadsheet and did monthly student loan payments + estimated mortgage / total gross income (pretax) for the two of us and came out at 27%.... no car payments or any other debt. So that's promising?

Agreed with paying off the loans being equivalent to earning the interest I'm paying. Just worried about it tanking my credit score and that impacting my mortgage rate...but you're saying worry less about the score and more about the DTI?

[Ken Robb]

It doesn't cost anything to talk with a mortgage loan officer or two. In my 36 years as a Realtor I often found that the best deal came through an independent mortgage broker. These folks work on commission paid by the lenders they represent. If they don't get you a loan they don't get paid. The salaried person at the desk at your local bank is probably not that motivated.

My favorite example: I found a home for a very successful international management consultant who was a Canadian citizen but had been living/renting a home in the USA for several years.

When I offered him contact info for my best mortgage broker he declined because he was such a good customer of Bank of America that he had a personal banker. He knew they would get him the best deal with no hassle. After a few weeks they turned him down because he didn't fit whatever borrower template they used to evaluate his application.

I had him collect his application file from BofA and give it to my broker who had loan approval in a week. Imagine our surprise when the broker told us the loan would be from---get ready--Bank of America! His comment was that "personal bankers" were often just junior trainees in the bank's management program while good brokers could speak directly with senior underwriters. These underwriters appreciate that good brokers can send them a lot of business so they are happy to look at applications submitted that way even if they don't fit cookie-cutter standards.

I have been retired for 8 years so things may be different now but it's worth investigating brokers and direct lenders.

You said you don't want to get involved with a financial adviser now and I get that. You can get good info on how to get the best deal on home loans by speaking with one of these guys. Since home loans now are still around 4% it seems like a mistake to carry student loans at 6%. Interest on home loans is tax-deductible; I don't know if that is true of student loans.

A loan person can tell you about low/no down payment loans as well as conventional programs. Low down loans may carry a slightly higher interst rate than those with bigger downs but even so I doubt the difference would push your rate anywhere near 6%.

Ask around for referrals to good Realtors because they often know some good loan officers. If these people have been in business for 10 years or more you can be pretty sure they are competent and honest because long-term success is usually the result of referrals from happy customers.

[4Rings6Stars]

A couple of thoughts...

1) Don't know your income level, but suspect that your student loan interest is deductible on your taxes, so might want to take that into consideration when debating to pay off the loan vs. investing the money

2) Have you looked into consolidating your loans into a single loan at a lower interest rate?

3) Depending on how good your credit is, I wouldn't worry about an 18 point drop in your credit score. Besides, any mortgage lender (esp. in today's lending environment) is going to look closer at your credit history vs. just your score.

Thanks for the response.

1 - student loan interest is deductible but only the first $2500. At our tax rate, this saves us ~$350 / year. In the near future though we will start to have this benefit phased out b/c of income level though.
2 - I have looked into this briefly, but it seemed sort of gimmicky and was told it could hurt my credit score... I think I'm learning that I'm probably too afraid of this stupid score
3 - The first 18 point drop didn't hurt much...but I'm worried if I pay off the rest and it drops another 15-20 points, that will hurt. I'm told as long as it's above 730 you're good....another 20 point drop would put me just below that.

[4Rings6Stars]

I'm only a few years ahead of you and I can tell you that paying off our student loans was the best thing we did. For peace of mind if nothing more. We lived cheap. Cheap apartment, no eating out, no driving on the weekends, no tv, we shared internet with two other tenants of the apartment and had no other loans or debt. All of my wife' s income and part of mine went directly to loans.

I did end up buying a house prior to completely paying them, but it was a perfect storm. i live in a very competitive market for "average" homes but the perfect house was available, the market was the lowest I had see it and interest rates were at like an 80 year low. funds I intended to use to pay off the loan were redirected to buying the house but our learned frugalness and a pay raise allowed us to pay off the student loans shortly after buying the house.

The only thing we pay interest on now is our house and if needed, could survive on minimum wage plus savings for quite a while. It's a good feeling.

We are not quite as frugal...but close. Having a baby makes it harder though! The ultimate goal is debt free...

[54ny77]

DTI is among the first steps in qualifying for a mortgage. Other factors are credit scores, reserves (liquid and not-so-liquid, i.e., retirement savings), down payment, and loan to value (amount of loan divided by appraised value).

You've had the student loans, presumably, for awhile and have been paying them on time. That helps establish credit history.

Don't forget to include credit card debt. if you have a balance, it's the minimum monthly payment that factors into the dti.

You can do what's called a soft pull of your credit score for free, via the credit bureau websites. As Fuzz said, it'll swing from time to time depending on what you do, but don't obsesses over it. Lenders have FICO buckets in their loan products, e.g. 680-710, 710-740, that sort of thing. The only thing that matters is that you're in a better bucket, because it'll mean a lower interest rate, generally.

There are a myriad of mortgage products that permit all kinds of variants for one's personal situation (and always come at some sort of cost), but what i'm trying to show here is the very basics. Talk to a good mortgage broker or bank who can walk you through the different types of products and applicable interest rates for your situation. As Ken said, a good broker will typically have more product and rate options and is often the best route, but a local bank (not a big global bank) such as a savings & loan or a credit union can often be very competitive and have a strong likelihood of approval/closing on the initial estimated terms. Especially if they are going to hold your loan in portfolio (meaning they don't just flip it to a loan buyer or sell it to a government agency--assuming it's an agency-eligible loan).

Interesting and very helpful.

I just checked my budget spreadsheet and did monthly student loan payments + estimated mortgage / total gross income (pretax) for the two of us and came out at 27%.... no car payments or any other debt. So that's promising?

Agreed with paying off the loans being equivalent to earning the interest I'm paying. Just worried about it tanking my credit score and that impacting my mortgage rate...but you're saying worry less about the score and more about the DTI?

[fa63]

I would pay off the student loans. Start with a clean sheet before you buy a house (aka money trap), if that is what you want. Between my wife and I, we have two houses (one we live in and one rented out) and quite often, wish that we didn't and lived in a rental instead.

I am also not sure if now is a good time to buy a house. I would almost be tempted to wait for the next inevitable real estate bust.

[yngpunk]

Thanks for the response.

1 - student loan interest is deductible but only the first $2500. At our tax rate, this saves us ~$350 / year. In the near future though we will start to have this benefit phased out b/c of income level though.
2 - I have looked into this briefly, but it seemed sort of gimmicky and was told it could hurt my credit score... I think I'm learning that I'm probably too afraid of this stupid score
3 - The first 18 point drop didn't hurt much...but I'm worried if I pay off the rest and it drops another 15-20 points, that will hurt. I'm told as long as it's above 730 you're good....another 20 point drop would put me just below that.

I think you worry too much about your credit score impacting your ability to obtain a mortgage or it alone impacting the rate you would get. Might be worthwhile to talk with a mortgage lender or mortgage loan broker to better understand their underwriting criteria. Credit score probably plays more of a role in auto and consumer financing, since it's a simple, easy to obtain measure of "credit worthiness", but after the last mortgage lending crisis, most lenders take a much harder look at your credit history when underwriting a mortgage...even if you have a 730+ credit score.

[yngpunk]

[QUOTE=4Rings6Stars;1825500]Thanks for the response.

2 - I have looked into this briefly, but it seemed sort of gimmicky and was told it could hurt my credit score... I think I'm learning that I'm probably too afraid of this stupid score
QUOTE]

The "usefulness" of consolidation in part rests with who "owns" your student loans and what the terms of the consolidated loan look like. A good place to start is here: http://loanconsolidation.ed.gov/

[SoCalSteve]

As others have said, a mortgage company ( whether it be a bank, broker or direct lender ) is your best bet in finding out about getting the best possible loan...

And, if you do get pre - qualified, that goes a long way in the house buying process as well. You coming in with a lesser offer, but pre qualified will probably get you the house over someone who offers more money but isn't pre qualified.

It's a win - win all around. I have used banks, brokers and direct lenders and have found that a direct lender was the easiest way ( and lowest interest rate ). I have used Greenlight Loans 3 times to refinance my house. All 3 times were great experiences ( and my loan is at 3.875 now ).

Good luck!

[MattTuck]

I don't have time to read this whole thread, but I'll give you some advice that I've learned the hard way.

Keep your monthly nut LOW. The lower the better.

I include in the nut anything that you're obligated to pay.

Housing costs
student loans
insurance
car payments + related expenses
telephone, cable, electricity, gas, etc. utilities


Student loans can be nice, in that sometimes you can put them into deferment if you need to. You cannot do this with your landlord or mortgage... they'll laugh you out of town if you call them and ask to not pay for 6 months.

Don't plan for the good times, plan for the bad times. And having a small nut is what makes the bad times easier to get through.

If you can pay off your entire student loan balance and eliminate that line item from your monthly expenses, I'd consider it. If you'd just be paying off a part of it (while still having to pay the monthly amount), I wouldn't do it.

Having the cash cushion is preferable to me, compared to having no cash cushion and still having to pay a monthly loan.

Sorry I can't write more. Trying to get some stuff done at work before heading out of town for a couple days.

[saab2000]

I'm a big fan of not paying interest, especially non-deductible interest.

I'd pay off loans if it were me. Figure out how much interest you're paying and that's how much more you'd have in your pocket each month without those loans.

That's just me, but I hate debt.

[thirdgenbird]

I wouldn't say deferment is a nice thing. Deferment isn't needed if you don't hold the loan to begin with and it also does nothing to release you from the obligation.

I would rather have a cash reserve that I can live off of if needed. The impact you your income is the same but it also allows you to continue to reduce outstanding debt. The bank won't defer my mortgage, but my ability to pay it is not reliant on a consistent income. Deferment would do nothing for me.

If you can afford to pay the mortgage and your student loan payments, eliminating the student loan payments would allow you to increase the amount you are saving each month by the same amount you are currently paying in loans. You might be surprised how much you can save once the loans are gone.

how many student loans are you currently paying on and how are you distributing payment? The snowball method works great if your goal is reducing your debt to income ratio.

[MattTuck]

I wouldn't say deferment is a nice thing. Deferment isn't needed if you don't hold the loan to begin with and it also does nothing to release you from the obligation.

I would rather have a cash reserve that I can live off of if needed. The impact you your income is the same but it also allows you to continue to reduce outstanding debt. The bank won't defer my mortgage, but my ability to pay it is not reliant on a consistent income. Deferment would do nothing for me.

If you can afford to pay the mortgage and your student loan payments, eliminating the student loan payments would allow you to increase the amount you are saving each month by the same amount you are currently paying in loans. You might be surprised how much you can save once the loans are gone.

how many student loans are you currently paying on and how are you distributing payment? The snowball method works great if your goal is reducing your debt to income ratio.

I was just saying that, all things being equal, having the option to defer your loans if your situation goes South is a nice feature to have. It should only be used in extremis, but it is clearly a better option than defaulting on your student loans.

I was not saying that it is nice to put your loans into deferment.

[jghall]

While dti is one of the first things looked at, 36% or less is not an unwritten rule. Some of it is how the applicant manages their debt.

18 points is minor in a credit score. Unless it by chance drops you down a level(in the range used).

And to think you need to have a 730 or + fico score to buy a house is bunk. You may pay an 1/8th percentage more in the rate if you're bringing say a 680, but with rates being were they are that equates to very little in a monthly payment.

[druptight]

And to think you need to have a 730 or + fico score to buy a house is bunk. You may pay an 1/8th percentage more in the rate if you're bringing say a 680, but with rates being were they are that equates to very little in a monthly payment.

I was going to write to make a similar statement. My wife and I just recently bought a new home and were fighting over these scores with the mortgage company because my wife's was lower than mine, they took hers - so that's the first point, if two of you are on the loan, worry about the lower one. 2nd, her lower score was still in the 750 or 60 range, and mine was in the 800 range, but it kicked us down below the very top bracket by a few points. I was super concerned about it at first but I think moving down a notch in this case wound up costing us 1/8 of a percent. Which if you calculate it over the full 30 year life still isn't much.

W/R/T the loans, I'm a bunch of years ahead of you, graduated grad school in 2004, and the wife and I are still paying down a rather high student loan balance. About 1/3 is fixed at about 2.6% so there's almost no incentive to pay that down faster, a 1/6ish is variable but at about 3%, and then about 1/2 was variable in the upper 6% range. That last bit, we consolidated to a fixed rate - it didn't drop the rate but now it's fixed in the 6's.

We're now in a house that we don't plan to move out of for a while, so paying down that debt is our next hurdle which we'll tackle over the next few years.

The one thing I've learned FOR ME, is that I needed to balance what I know is the right move fiscally with being able to enjoy my life. We're in a pretty decent financial situation despite the college debt, have 20% down on the house, reasonable retirement balances, and I've got bikes and golf clubs that satisfy my ability to enjoy my hobbies. Starting out with well over $100K in debt, personally I couldn't bring myself to live paycheck to paycheck for years to get it paid down before I began to enjoy my life. Might take me a couple extra years, but it'll get done.

[yngpunk]

I was going to write to make a similar statement. My wife and I just recently bought a new home and were fighting over these scores with the mortgage company because my wife's was lower than mine, they took hers - so that's the first point, if two of you are on the loan, worry about the lower one. 2nd, her lower score was still in the 750 or 60 range, and mine was in the 800 range, but it kicked us down below the very top bracket by a few points. I was super concerned about it at first but I think moving down a notch in this case wound up costing us 1/8 of a percent. Which if you calculate it over the full 30 year life still isn't much.


Interesting that they took the lower score. I've heard that they would average them. Personally, I would have shopped around for another lender. With scores in 750+ range, there should have been lenders competing for your business. 1/8 point is still an 1/8 point and over the term of the loan, you could have bought a new Silca pump with the savings. :D

[zap]

Since I started working in early 2013, we have been frugal and have saved a good amount towards a down payment.



See if your employer is willing to pay your student debt.

[nm87710]

Good Luck!

[RyanH]

Not much to add to this except I've noticed credit scores seem to fluctuate for various, random reasons. I monitor my budgets/finances through Mint, which now provides my credit score every 3 months. Since it has provided that, I've noticed my score fluctuate between 750 something and 780 something. My personal take is that it may just be noise.

[4Rings6Stars]

Thanks for all of the comments.

I think I will try to find a good real estate agent in my area who can help direct me to a good mortgage person and see what they have to say, but I'm leaning towards paying off at least the 6% + student loans in the short term so I don't deplete all of my cash. That will significantly reduce my monthly required payment, so I can increase savings if I'm feeling light on cash.

Good to know that another 20 point drop or so in my credit score won't cripple my chances of getting a decent loan.

I don't think I could pay off my loans and get a 15 year mortgage any time in the near future (home prices in my area average $400k), but my goal will be to pay off the mortgage and student debt as fast as I can. I've never made a minimum payment on anything and don't intend to.


See if your employer is willing to pay your student debt.

Hah! I wish. At ~200k employees and the average college student graduating with ~$30k in debt, I think it would put them out of business! Seriously though, I have heard of some employers that do help pay down loans. Unfortunately, mine does not.

[AJM100]

not a big advocate of mortgage brokers, but if you have enough of a downpayment and the purchase price v. appraised value of the property is right you may be able to do an 80/20 or some combination of a 1st and 2nd mortgage or equity line with the caveat that the student loans above the purchase price are paid out at the closing.

with the fed at zero still even with an adjustable 2nd/equity line you will most certainly be saving big.

all will depend IMO on appraisal and underwriting requirements with a particular lender

that is where a good mortgage broker will come in as a necessary evil to find out if this could be possible.

good luck.