[quote=moneymaker]Sounds to me like a recipe for disaster, I believe the student debt would be dischargeable once co-mingled with the mortgage debt and when house prices fall, and they will, then boom they would all file for bankruptcy and start fresh again later on.[/quote]
The way I read the article was essentially you give us a down payment that is the size of the student loan and we give you a zero down home loan. I would guess the student loan gets paid in full (why would the loan company pay 6-7% when it’s receiving something less than that). The idea being since you brought money to the table you less likely to walk away from the zero equity property even if it declines in value. To me it just seems to shift up the purchase date in some young professionals life. I.e. They can get into a house 4 years after graduation because they manage to save enough to pay off their student loans, rather than waiting 8 years to pay off the student loans and save a down payment. If you of the opinion that interest rates will rise, home prices will appreciate, and rent will continue to go up then getting in earlier is beneficial.
I don’t see the interest rate for this loan product in the post but my best guess is that it’s something around 5%. Better than the student loan interest rate but worse than a conforming loan product. It’s a search for yield that’s targeted at a better credit risk.
