Buying a house on student loans?

[Armymutt25A]

The NCSU FB page is tossing this idea around right now. Since most of us will be getting loans for school, we're wondering if anyone has experience in buying a home when your income is loans. I have the addition of the GI Bill housing allowance. I'm considering this over renting for a couple of reasons. Primarily, if I own the place, it's cheaper on monthly costs and there's no pet restrictions. The down side is unloading it in 4 years without loss. My current house has gained about $20K in the last 5 years, and the area I'm looking at is currently experiencing some massive growth, as it is within easy commuting distance of Raleigh, yet doesn't feel like a big city.

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[HopefulAg]

Not a decision I had to make but if you can make the down payment without tapping into loans, then I'd go for it.

As for unloading it in four years, why? You can try and sell it if you want or just keep it and rent it out to college kids.

 

[pennyonthefloor]

I bought a house in April of 08 in anticipation of being at OSU's vet school.... will be starting this fall. Heavily weighed the option of (once I'd finally be in vet school) throwing my loan money away by renting or at least getting a bit of return on that expense... I'm glad I bought the house. I plan on keeping the house as a rental property when I'm done with vet school...

My $0.02: If you are a handy do-it-yourself type of person (or have friends/relatives that live close that are), I'd say home ownership would be a worth while venture while living on loans. If not, just be cautious... you have no one that's responsible for maintenance issues but yourself (and repair bills can be somewhat steep- for a $40 part to install in my furnace this spring, a hvac company wouldn't even come look at it for less than the $120 service fee... that didn't include the hourly rate or parts. Needless to say I learned a bit about fixing furnaces that day)

The house I bought was in foreclosure and the property was valued at $40k more than what I paid for it. Properties are selling fairly cheap with the housing market being poor but I'd be wondering how easy it would to get financing- I hear it's more difficult now than it was in 08. If you can swing home ownership, go for it.

 

[Jakesmom]

I'm in the process of trying to buy a house right now myself. I had originally only thought of renting, but the more I looked into it, the more that I saw that the only way I would be able to afford to rent the type of place that I wanted to live in would be to have a roommate, and I do not want a roommate. I have a trouble-causing 4-year old rescue who I have learned to deal with, but I can just picture it now: "Jakesmom, look what your dog did!" Plus, I've had roommates for the past 13 years or so, and most of them have turned out to cause me more stress than anything else. I'm lucky to have saved about $26,000 from my teaching days that I can tap into for my downpayment. I figure I will use about $15,000 as downpayment, $3-5,000 for closing costs, and the rest will be saved for emergency home repairs. However, I did have to get one of my parents to co-sign the loan for me, as I do not have a spouse. When applying for the loan, they said that they will most likely have to assume that I will have no official income while in school, since I do not have a job currently in Columbus. Even though I have a job now, it's not in the city where the house is, and they put my status down as "student" for Columbus. If you're lucky to be working in the same area you will be buying your house, you can probably get away with not even mentioning that you are going to be a student. They will not look at the amount of money you will be bringing in from loans to count towards your ability to make mortgage payments. You know you will have the money, but they don't count one debt as a means to pay off another debt. With my mom as my co-signer, she is a non-occupant co-signer, which means the only type of loan I can apply for is the FHA loan. Well, technically, I would be allowed to apply for a conventional loan, but only if your debt-ratio is under 50%, but they count my student loans (which are not even in repayment at this moment), which kicks me far out of that ratio Buying a home is a heck of a lot more complicated than I had originally thought, but like penny said, I think in the long run, it will save me money I would have just been wasting on rent. Yes, the house could lose value, but in this market, I don't see how housing prices could drop any further than they already have. I'd like to think that things will very, very, very slowly improve over the next few years

 

[Tech2Vet]

Will you be able to get approved for a mortgage if your source of income is another loan? I'd be surprised if you'd be able to.

As far as this discussion being on the NCSU page - my husband and I own a home in Raleigh and although this is a good time to buy here, the housing market hasn't been hit as hard as other places in the country. So, if you're expecting a large return on a house investment after vet school is finished, you may not find that here.

On the other hand, I totally agree with not throwing money away on rent. So if you're able to find a mortgage company that will give you a mortgage and you have a good down payment, I'd say go for it. I just think that finding a mortgage will be your biggest hurdle.

 

[lareinesoleil]

Will you be able to get approved for a mortgage if your source of income is another loan? I'd be surprised if you'd be able to.

I had ruled out buying for this reason, so if you guys are successful please share! It would indeed be nice not to throw away so much on rent; at least with a house you've got a chance of getting it back.

 

[StartingoverVet]

Generally it will not be possible unless you have:

* a spouse with a source of income
* someone to co-sign your loan
* a sponsored program from some organization.

It was possible BEFORE the financial crisis but loan standards have changed considerably since then.

Of course, even with the above, you will probably need a substantial down-payment. I doubt anyone would qualify for the FHA down-payment help since income is lacking.

Even with a co-signor you will receive a much higher rate than normal people.

One possible option is to find someone who can afford to get a decent mortgage, have them buy the house, while you get a lease from them with an option to buy the house in 5years at the purchase price. Your lease payments pay the mortgage payments out of your student loan, and then when you can qualify for a mortgage in 4 or 5 years you effect the sale into your name and voila, you own the house.

They break even with no outer of pocket expense, you get your house and everyone is happy. Well, it is more complicated than that but you get the idea.

 

[blackangussteak]

I first read the topic as "Buying a horse on student loans?"

Resume the discussion

 

[Armymutt25A]

Oddly enough, there doesn't seem to be any issues with me keeping my current mortgage that has a payment much higher than the one I am seeking in a new mortgage. Loan guys are telling me basically that time is of the essence here - need to get the loan approved and house purchased a month or so before I get out of the Army. Kind of figured that, now if only someone wants to buy my place.

 

[BHLegend]

hmm... it would be awesome to buy a house (my own space... with a garage... what a nice idea) but I had some issues getting approved for a used vehicle loan (which I'm about to pay off 4 years early, because I planned and saved for it for 2 years). I considered buying a house instead, but my car was 22 years old and starting to have expensive problems on a weekly basis (and my mechanical knowledge is limited). It would be nice to have a fixed mortgage payment and know that my rent would not be increasing every year, but I don't have any relatives who were interested in helping me pay for college or school or anything else, so convincing them to cosign for a mortgage probably would not work out either. One day I aspire to live on a professional's budget rather than on a meager professional student's budget. For now at least I have a lease in an apartment down the street until Next June. I guess when they raise it at re-signing, I will worry about it then.

If anyone has any ideas (besides cosigning/relying on a spouse or another person) I'd love to hear them.

 

[twelvetigers]

Your mortgage payment may be fixed, but it still seems like the escrow increases yearly.

 

[LetItSnow]

Your mortgage payment may be fixed, but it still seems like the escrow increases yearly.

No kidding, right? It's so bizarre to me to watch my house value go up (along with my property tax), and then watch my house value go down (while my property tax keeps climbing).

Buh? How's *that* fair? Ah well.

 

[Jakesmom]

Just an update on my house-quest. I was able to get a pre-approval for a mortgage loan, with my mom as my co-signer. Granted, they were restrictive in the maximum they would let me borrow and under what conditions I could borrow the funds. But I was pretty realistic in what my price range was going to be, so I wasn't surprised. It is possible to get a mortgage loan, but you're probably going to need a co-signer with great credit, great credit yourself, and some funds to be able to use as down payment. I don't think I would have been approved without those things.

 

[Armymutt25A]

Got a good one today. Since I have to apply for the loan before I get out of the Army, one option is to have two VA loans. The problem is, the loan has to be greater than $144K - the house I'm looking at is $140K. I don't think closing costs will be enough to reach the bar.

 

[twelvetigers]

Ask them to charge $1k or $2k extra - do you think they'd mind?

 

[awaring1]

I was seriously considering buying a place instead of renting (like a trailer at ISU). One thing that concerned me was how high the mortgage payment would be. Would it be low enough that the predicted monthly expenses in loans would cover it each month, or would I need to get a job? I know each mortgage is different, but is it possible to have a payment that's less than $600/month?

 

[pennyonthefloor]

I was seriously considering buying a place instead of renting (like a trailer at ISU). One thing that concerned me was how high the mortgage payment would be. Would it be low enough that the predicted monthly expenses in loans would cover it each month, or would I need to get a job? I know each mortgage is different, but is it possible to have a payment that's less than $600/month?

It can be possible.... just depends on where you live. My house in Columbus- my mortgage is a few hundred more than that... but then again housing prices in the Columbus area are a bit more than more rural settings (I am staying in NW Ohio right now for work-- everyone in this area is in shock about the value of my house... properties around here are around $40-70k... whereas my house is at least double that...). It never hurts to just talk to a real estate agent... do a lot of research, ask around.... try to be as informed as you can about the area. Price range for a $600/month mortgage would be about $70k for a house.... not impossible (especially with some of the prices of some houses for sale that I've seen.... made me contemplate buying a rental property!).

As far as my housing situation goes, I'm having roomates this fall (a good option if you're concerned about making payments). I know what my bills are and yes, I could technically live alone off of my own loans (if I didn't do anything else and was satisfied with Ramen Noodles every night)... but I figure the company would be well worth it.

My other word of advice- don't divulge the "I'll be relying off of loans 100% in x amount of months" information. The bank only looks at your current income and usually the past 6 months. All they care is that you can make the payment given your history-- they're not looking at your future. Just don't go crazy with an expensive house and be sure that you figure out what loan money you will have-- and make sure you can afford the house you're looking to buy.

 

[awaring1]

Hopefully I will be living with my boyfriend and he will be working full time and I think I can get my parents to co-sign a loan for me.

It is very tempting to buy a house and get a return, but I am still really nervous about it. Going to vet school is a huge step in my life, and buying a house is another huge step. As a 22 year old would I be ready for both of those steps? What if I can't sell my house when I graduate and I am stuck paying off my student loans and my mortgage? But what if I can sell the house? Even if I don't make a huge return on it I will have saved thousands of dollars from not renting!

Ugh. I think I need to talk to a professional.

 

[2CatMatt]

Ugh. I think I need to talk to a professional.

That's a good idea. Buying a home isn't risk free. Buying a home and using loans as your only income to make the monthly paymenst is extremely risky - especially if your time frame is out of your control. Four years is not that long to own a home and the price could easily flunctuate. If you graduate and HAVE to move - well then, that could be the worst situation. You have to move to make money to pay your loans, but you can't move because you still owe money on your house. Not a situation I would want to be in. Saving a few thousand bucks - if that - may not be worth the risk in being under water on a home you can't sell and having to start paying back over a $100,000 in loans.

Don't underestimate the positives of renting. yes, you might pay a bit more out of pocket, but it is virtually risk free.

Of course everyone's situation is different and it may make sense to purchase a home instead of renting - a spouse works, you can rent out a room and would be able to rent the house if you had to move, you can put down a healthy 20% down payment, etc....

 

[pennyonthefloor]

It is very tempting to buy a house and get a return, but I am still really nervous about it. Going to vet school is a huge step in my life, and buying a house is another huge step. As a 22 year old would I be ready for both of those steps? What if I can't sell my house when I graduate and I am stuck paying off my student loans and my mortgage? But what if I can sell the house? Even if I don't make a huge return on it I will have saved thousands of dollars from not renting!

It's a scary move, yes... but IMHO, it's worth it. I was in contract before I turned 22-- so I kind-of understand where you're coming from. At the time, I was dating a guy (who I had been dating for four years)-- I didn't have his name put on the house (my credit was a million times better than his-- he would've drug me down). I'm glad I didn't have him on the mortgage-- we broke up less than a year after I bought the house. Just be careful if your relationship isn't solid otherwise things could get bad if you break up and you have to split the house....

I haven't really thought about selling yet (am considering keeping it as a rental property as long as I live 'near' the area). The house I bought was foreclosed-- the day I signed my name on the line, I technically made ~$40k...

Best of luck!

 

[awaring1]

It's a scary move, yes... but IMHO, it's worth it. I was in contract before I turned 22-- so I kind-of understand where you're coming from. At the time, I was dating a guy (who I had been dating for four years)-- I didn't have his name put on the house (my credit was a million times better than his-- he would've drug me down). I'm glad I didn't have him on the mortgage-- we broke up less than a year after I bought the house. Just be careful if your relationship isn't solid otherwise things could get bad if you break up and you have to split the house....

I haven't really thought about selling yet (am considering keeping it as a rental property as long as I live 'near' the area). The house I bought was foreclosed-- the day I signed my name on the line, I technically made ~$40k...

Best of luck!

My boyfriend and I have been together for four years and he also has terrible credit so I would probably cosign with my parents. I know they said that if I got into Cornell (hahah, I didn't) they would actually buy a house and let me live there and then rent it out to college students. They said this when I moved off campus they saw how stupidly high the rent is in Ithaca. My landlord makes $2,100/month and does pretty much nothing. I am not sure if they would be wiling to do the same thing for a house so far away...

 

[Armymutt25A]

Ask them to charge $1k or $2k extra - do you think they'd mind?

My thought was to roll any closing costs into the loan. It's a VA, so no money down. Need to look at the place and see if it needs any work. Don't think it will happen, but if there are fixes needed, maybe get the bank to pay for them and add them to the loan.

 

[CurrySpice]

My thought was to roll any closing costs into the loan. It's a VA, so no money down. Need to look at the place and see if it needs any work. Don't think it will happen, but if there are fixes needed, maybe get the bank to pay for them and add them to the loan.

You could also try to negotiate furnishings from the previous owner. When my uncles sold their house, the buyer paid them an extra sum of money to leave all of the furniture & decorations.

 

[Armymutt25A]

It's a foreclosure - place has been empty for a while. Maybe I can negotiate tile floors in the kitchen and bathrooms instead of cheap vinyl.

 

[PreVetBeaver]

So I have been looking into buying a cheap house while I am at vet school and have discovered that if I live 30 minutes away from the vet school houses are only $60,000 (compared to a similar house 5 minutes away that is $135,000). This is an incredibly good deal and I have been thinking about potentially buying one of these houses. However, I am worried that the 30 minute drive everyday to school will become a hassle. Does anyone else have experience with this? Do you recommend it?

Thank you

 

[EllieGirl89]

So I have been looking into buying a cheap house while I am at vet school and have discovered that if I live 30 minutes away from the vet school houses are only $60,000 (compared to a similar house 5 minutes away that is $135,000). This is an incredibly good deal and I have been thinking about potentially buying one of these houses. However, I am worried that the 30 minute drive everyday to school will become a hassle. Does anyone else have experience with this? Do you recommend it?

Thank you

My first two years of undergrad were at a community college 30 minutes from my parents' house. My first semester I had classes 5 days a week. I did fine that semester, but I skipped a LOT of class, because one of them was an 8 am class so if I woke up much later than 7 I didn't have a whole lot of time to get my life together and get to class on time. The next three semesters I made sure to schedule class only three days a week so I wouldn't have to make the 50-mile round trip every single day. Gas prices were high then (even higher than they are now) and it was a bear to pay for.

Also, you have to think about clinics. Many schools require that you be able to get to the teaching hospital within a certain amount of time when you're on call (usually ~20-25 minutes). And that's not just driving time, that's from the time they call you until you walk into the hospital. So that's definitely something to consider at well.

 

[LetItSnow]

So I have been looking into buying a cheap house while I am at vet school and have discovered that if I live 30 minutes away from the vet school houses are only $60,000 (compared to a similar house 5 minutes away that is $135,000). This is an incredibly good deal and I have been thinking about potentially buying one of these houses. However, I am worried that the 30 minute drive everyday to school will become a hassle. Does anyone else have experience with this? Do you recommend it?

Well. I've commuted 30 minutes to work for the last 13 years, so...

I think there are a couple factors that you need to consider that we can't answer.

The first is: How will you commute? If you have to drive every day, then you need to figure out that cost (gas, maintenance, parking). It's surprisingly high. Compare that to public transit (bus? rail?). Your school might have public transit deals. Here in MN I think we pay something like $99/semester for unlimited riding. That's a HUGE benefit compared to the cost of driving!!

There's also the intangible: if you drive, you can't really do much else with that time (mayyyybe listen to something useful). If you take a bus/train, you can read/study/nap/whatever.

The next question is what Elliegirl raised: What sort of response requirement does your school have? I asked a few students at UMN and they indicated that it's infrequent and only for a week or two at a time depending on what 4th-yr rotation you're doing. So living 30 minutes away is easy: I'll just crash with a friend during those infrequent rotations. But if your school has more stringent requirements....

G'luck! If you can find a reasonably maintained $60k house in a safe neighborhood, that's an excellent choice.

 

[awaring1]

The problem with buying a house that far away your first year is that you find out that you hate driving 30min each day you are still stuck for four years. Maybe find an apartment in the same area for a month or so to see if you would like it. Although it will be possible to keep a social life, but it may be a lot more difficult

 

[Robdude]

So I have been looking into buying a cheap house while I am at vet school and have discovered that if I live 30 minutes away from the vet school houses are only $60,000 (compared to a similar house 5 minutes away that is $135,000). This is an incredibly good deal and I have been thinking about potentially buying one of these houses. However, I am worried that the 30 minute drive everyday to school will become a hassle. Does anyone else have experience with this? Do you recommend it?

Thank you

I think it really just depends on your frame of mind. I'm not saying one is better than the other, just different. But, if you want your vet school experience to be 'like college', you'd probably enjoy living on campus or near campus. After class, hang out with other students, hit the campus bars on the weekends. Have a good time.

If you think of vet school as more of a 'job' and less of a 'college experience' then a 30 minute commute isn't anything absurd. You'll save a lot of money on rent or your near-campus mortgage by living 30 minutes away. You also get the benefits of not dealing with college kids living in the apartment above you, next to you, making noise and having parties and all that jazz. You can always get books on tape or something if you feel like the commute is a waste of time.

 

[PreVetBeaver]

Wow, you all raised some very good points. Thank you so much. I think that I would probably drive to school, not take the bus (just because the bus to campus from this town is not very frequent). I know driving will cost me a lot, but in the end I feel like the money I will be saving in rent and the money I will get back once I sell the house would definitely make up for it. I just don't know how hard it will be to sell the house once I am done with school. The houses in this area generally cost closer to $90-$100k but because of the recession it seems that its hard for sellers to even get $50k for their houses. I am worry that it might be the same way (or worse ) in 4-5 years when I graduate. But then again, it could be a huge potential gain. I just don't know what to do for sure

 

[withoutane]

Actually, I talked with some of the admissions/administrative staff at OSU about housing. They say that a commute longer than 10-15 minutes can be very stressful (there are a few students who commute an hour both ways, though). Study groups are a pain in the butt, driving home after a particularly exhausting day can be dangerous, and if you forget something at home it would be impossible to go get it. However, the parking around OSU CVM is very good (except on game days) so driving isn't an issue. There are also a lot of cute reasonably priced rental houses ~5-10 minutes away. Renting might be a good idea because you're not financially responsible if something goes wrong. If your hot water heater stops working, for example, YOU don't have to pay for it (as long as it wasn't your fault). Unforeseen expenses can be very stressful! Also, you don't have to worry about selling your house after you graduate. This could be stressful if you have to move away for a job or internship. You might end up having to pay for a few extra months of mortgage, plus pay for another place where you move, PLUS start paying off your student loans.

My plan, basically, is to try to limit as many sources of stress as possible while I'm in vet school - housing is a BIG one. Not to say that renting isn't stressful...but the cons list for buying is long for me. Good luck making a decision!

EDIT: Scratch that I've decided to buy because I've found a place that costs less than renting and is lower risk for unforeseen expenses. I'm not commuting though.