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I have never bought a home before, so I honestly have no clue if this is possible. And yes, I am being over-simplistic on purpose in this question so I don't sound too ill-informed .
Question:
I am looking at a houses around $55k and plan on buying one next year. $27k of my student loans are on an ARM.
So, in theory, is it possible to request a $82-$85k loan to buy a $55k house and use the excess to pay off the student loan? That way, instead of owing that $27k on a 6.8% ARM, it will just be added into my fixed mortgage which will probably not only be fixed - but also be under 6.8% (I have a GREAT credit rating and alot of credit history).
I would be putting 10% down.
Thanks for any responses ...
Last edited by Azalea City Man; 10-22-2008 at 05:31 PM..
So, if a house is listed as $55k, and I hypothetically put $10k down, the most I could borrow would be $45k? Is that really how it works?
No, you can only borrow on the EQUITY in the home. If you put down $10K, that is your equity, therefore you could borrow $10K. The only advantage I could see is that the interest then becomes tax deductible - and they may have changed the tax laws, not sure on home equity loan interest anymore, check with a financial person.
Lender won't do it. Plus...don't EVER put other debts onto your home! Taking out more than a home was worth is what got so many people into trouble here recently. Don't follow in their less-than-stellar path.
Have you looked into consolidating or refinancing your student loans? With excellent credit and stable job history it may be possible to get a lower rate or better terms.
No, you can only borrow on the EQUITY in the home. If you put down $10K, that is your equity, therefore you could borrow $10K. The only advantage I could see is that the interest then becomes tax deductible - and they may have changed the tax laws, not sure on home equity loan interest anymore, check with a financial person.
I'm probably showing my lack of knowledge in this area even more here ... but I don't understand. If you can only borrow what you put up for a down payment, how does anybody buy a home? Wouldn't it look something more like this for me?
House: 60k
Down Payment: 10k
House Note for 30 years: $500 a month
Am I missing something? I know not everyone who buys a 200k house puts 100k down, as the notion that you put forth.
I hate that I don't know more about this . It's prettymuch the one area of life in which I am cluless - buying a house.
Have you looked into consolidating or refinancing your student loans? With excellent credit and stable job history it may be possible to get a lower rate or better terms.
Yes, I am actually looking into that ... 23k of my student loans are consolidated (bechelors), but due to economic times, Sallie Mae will not consolidate the other 27k (masters) when I asked them a week ago (just started repayment of masters loans - the 27k - this month). Any advice?
I'm probably showing my lack of knowledge in this area even more here ... but I don't understand. If you can only borrow what you put up for a down payment, how does anybody buy a home? Wouldn't it look something more like this for me?
House: 60k
Down Payment: 10k
House Note for 30 years: $500 a month
Am I missing something? I know not everyone who buys a 200k house puts 100k down, as the notion that you put forth.
I hate that I don't know more about this . It's prettymuch the one area of life in which I am cluless - buying a house.
I think that (in red) is where your thought process is getting confused. If you bought a house for 60K, you could have a minimum down payment as low as $1800+/-, which is 3% of the sales price. So, if the sales price were 200K, the down payment would be 6K. The sales price and loan amount are determined by how much your income will support.
Does that help?
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. It's prettymuch the one area of life in which I am cluless - buying a house.
