What should I do about this loan? Mortgage vs student loans?

Tuesday, 14. September 2010

My math skills aren’t amazing and I’m not sure how I would figure this out anyway, so maybe someone can help me. This is a real life question. We have about 60 or so thousand dollars in private student loans and then maybe 10 in federal loans. If you’re not familiar with private student loans, skip to the bottom and I’ll explain them. The rate for the student loans is currently about 9%.

We are selling our house and if we sell the house for the amount that we paid (we’ll probably get a little more), we will net about 35,000 after commissions. We’re planning on buying a small fixer upper for 75-100,000 and getting a 10 year mortgage. Mortgage rates look like they’re about 4 or so percent. I was planning on getting the 10 yr mortgage, paying it off in about 4 years and then taking out a home equity loan and paying them off. My dad said that I should either put down less and pay down the student loans even though it doesn’t pay them off or take out equity as I go and pay them down.

My hesitation to do this is that my payment on the student loans won’t go down just because I owe less, but with a HEL, I will be paying more for the time being (mtg + HEL+ student loans at the same time). It’s still doable, but I’d rather not be paying more than I have to.

So my question is this:

if I pay down as I go, will my student loans skip ahead so that I’m paying a higher percentage of my payment to the principle than interest? Or is the percentage of principle vs. interest determined by time rather than how much you owe?

What do you think the best strategy for paying off these loans quickly and for the least amount of money?

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Private student loans: they were offered for a short time while lenders were lending money like crazy and they’re not federal loans, so they don’t have the low interest rates. The interest rates on private student loans are variable, currently at about 9%, but it’s been as high as 11.5%. No one is offering them anymore so you can’t refinance them, lock in a rate, file for bankruptcy, or in any way alter the loan terms. No matter what, the loans will be at that rate and you can’t get rid of them. If our credit scores go down or we don’t pay on time or whatever, the rates can go up to whatever they want. So as you can imagine we are dying to pay these off and get them out of our lives.
"The value of the "fixer upper" is based on the market. Planning to take a heloc to pay off the student loans is not necessarily a workable idea."

thanks. The market here is extremely stable, so I wouldn’t expect for the house to gain equity through fixes (although it probably would). The equity would come through buying a cheap house and paying it off cheaper. The logic is that fixers are cheaper and thus easier to pay off. If I sell it later, It will be worth the same or a little more than I paid for it. I’m not expecting to make a profit on the house, just pay it down and then use what I’ve paid off as equity. The market won’t go up, but it also won’t go down either. (most likely)
"Have you talked to a banker to determine if there is a different type of loan that you could use"

I haven’t. I should do that although I’m doubtful. That’s a lot of money and I can’t imagine having that much borrowing power. Hmm…maybe, I’ll look into it. I don’t have many assets outside of the home equity.

"This provides you cash to pay off student loan faster and allows for interest deduction for longer period of time"

So take out a second mortgage to pay off the student loans? I’m actually not sure that the interest will be high enough to be tax deductible. The houses we would buy are less than 100K, so the payments would be very low.


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What should I do about this loan? Mortgage vs student loans?

Monday, 13. September 2010

My math skills aren’t amazing and I’m not sure how I would figure this out anyway, so maybe someone can help me. This is a real life question. We have about 60 or so thousand dollars in private student loans and then maybe 10 in federal loans. If you’re not familiar with private student loans, skip to the bottom and I’ll explain them. The rate for the student loans is currently about 9%.

We are selling our house and if we sell the house for the amount that we paid (we’ll probably get a little more), we will net about 35,000 after commissions. We’re planning on buying a small fixer upper for 75-100,000 and getting a 10 year mortgage. Mortgage rates look like they’re about 4 or so percent. I was planning on getting the 10 yr mortgage, paying it off in about 4 years and then taking out a home equity loan and paying them off. My dad said that I should either put down less and pay down the student loans even though it doesn’t pay them off or take out equity as I go and pay them down.

My hesitation to do this is that my payment on the student loans won’t go down just because I owe less, but with a HEL, I will be paying more for the time being (mtg + HEL+ student loans at the same time). It’s still doable, but I’d rather not be paying more than I have to.

So my question is this:

if I pay down as I go, will my student loans skip ahead so that I’m paying a higher percentage of my payment to the principle than interest? Or is the percentage of principle vs. interest determined by time rather than how much you owe?

What do you think the best strategy for paying off these loans quickly and for the least amount of money?

*************************************
Private student loans: they were offered for a short time while lenders were lending money like crazy and they’re not federal loans, so they don’t have the low interest rates. The interest rates on private student loans are variable, currently at about 9%, but it’s been as high as 11.5%. No one is offering them anymore so you can’t refinance them, lock in a rate, file for bankruptcy, or in any way alter the loan terms. No matter what, the loans will be at that rate and you can’t get rid of them. If our credit scores go down or we don’t pay on time or whatever, the rates can go up to whatever they want. So as you can imagine we are dying to pay these off and get them out of our lives.


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Good lender that understands real estate investing.?

Saturday, 11. September 2010

I am starting to look for an investment property in Phoenix or Tucson. I am after solid property with instant positive cash flow, should not be too hard to find these days. I tried to contact several of my "old" lenders who either lent funds to me or expressed interest in my deals in the past. Now when I tried to contact them they don’t respond at all. I now live overseas, but have US based income as well as plenty of equity in Arizona real estate. It’s almost as if lending business went dead. The point is that I am looking for a lender or mortgage broker that
a) understands real estate investing
b) still provides low doc loans.

I am self-employed, decent income (both US and abroad), excellent credit score, never had a credit blemish on my report. Plenty of equity in real property (land). No debt. US citizen. Experienced in real estate investing.

If you know a good contact that can work with me I would greatly appreciate it.

Thanks a lot in advance!


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If i go into foreclosure would my second mortgage still come after me?

Monday, 6. September 2010

The 2nd is with WAMU. I am getting conflicting info from various parties, from lenders to attorneys to friends and need a way to find out for sure. Thanks.


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What is the difference between a 1st mortgage, 2nd mortgage, and home equity loan?

Thursday, 2. September 2010

I am searching for financing to make home improvement repairs, I submitted a request for a home equity loan through lending tree. The lenders throwing out terms such as 1st mortgage, 2nd mortgage, and home equity loan.


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I am behind in my first and second mortgage, I am thinking in forclosure, or shortsale or bunkruptcy, help.?

Sunday, 15. August 2010

I owe 2 houses one under my name, in the rental property I am 1 payment behind in the first deed and 5 payments behind on the second deed. I can’t make the payments no more, I am in home loans, and my paycheck has been reduce soo much. I want to keep only my owner occupied property and let go the rental. Balance is 0,K and 0K on second. I been thinking on calling the lenders to give them the house back, some other friends tell me to do a shortsale, and other to file bankruptcy or forclose the property. at this point all I want is not to have ,500 mortgage payment a month. I can’t refinance because there is no equity, and my credit has been ruined due to the late payments, I don’t want to go to a credit consultant because my intentions are not to keep the house. I need some advise before I go to an attorney .


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How does home equity loan qualification works if you have bad credit? ?

Thursday, 12. August 2010

My credit isn’t perfect and I want to get a home equity loan. What are the qualifications? What lenders look at if you have bad credit? How can i increase the chances of getting one, without waiting for credit to go up?

Would appreciate if you can answers even one question. I am desparate for good information. Thanks!


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Will I be able to get a home equity loan if I am currently in a forebearance agreement with my mortgage?

Saturday, 7. August 2010

We will be listed as "entering foreclosure" until September, but have already made 5 consecutive payments into the forebearance plan, including a large down payment. However, in order to get our finances in order and pay education costs, we need to take out a home equity loan. Will lenders approve the loan (if we have one great credit score, one bad, and a good income) in our current state? Or would it be rejected outright?


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