Mortgages for Millenials with Student Debt

[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.

[livinincali]

[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.

[scaredyclassic]

[quote=livinincali][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.[/quote]

Right.

[an]

[quote=bearishgurl][quote=spdrun]At least this isn’t being offered to the average millennial Twitter-twit so not too many millennials will get uppity. A good millennial is one that’s happily renting away.

If people aren’t buying houses: BUILD FEWER HOUSES. Rednecks in the ticky-tacky box-building industry aren’t owed a job, last I checked.[/quote]Exactly, spdrun. Thank you.[/quote]
Really? And where do you expect them to live? On the street? Just because they don’t want to buy a house doesn’t mean they don’t want to live in a house.

[pencilneck]

Are there that many people with close to $50k in savings that also have $50k student loan debts at 6-7%? The example makes no sense to me. I guess if there are enough of them, this makes sense.

“Here’s how a typical BurkeyMortgage might work: Say the would-be homebuyer is looking at a $500,000 house but has $50,000 in outstanding student loans. He would roll the two amounts into a single mortgage. But he would have to make a down payment of close to $50,000.

That would leave a balance of $500,000, which would be almost equal to a 100% loan-to-value mortgage. The rate on the mortgage would be far less than that on the student loans, which currently run between 6% and 7%.”

I also love how this is a feature. I’m going to start calling all of my credit cards “Life Events” cards too. So much cooler.

“Another loan feature will allow borrowers to temporarily make lower monthly payments for three consecutive months for “life events” such as the birth of a child or a divorce. Of course, interest will continue to accrue during that period, and escrows will be recalculated once the borrower resumes making regular payments.”

[Author]

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