Huge mortgage.. financial aid?

[liability]

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This might be a stupid question, but...

Parents are thinking of using my good credit to take out a mortgage on a home...

If I take out a huge mortgage to purchase a home, how will the amount/interest be affected on the financial aid and loans I'm hoping to take out for med/graduate school? I'm thinking that having a 400,000 liability on my books might make me unattractive as a student loan recipient.

Has anyone dealt with a situation like this, or have any helpful links?

Thanks in advance!

 

[TMP-SMX]

And what happens if your parents can't pay? Seems like an unnecessary risk to me. Is their credit that bad? If it is bad, do you think they will be able to pay it back now?

Though if they are able to pay it off it won't affect your eligibility for loans unless you are trying to get private loans. Federal loans except Grad Plus have no credit checking. Grad plus just checks if you have been in default before and don't have bad credit.

 

[rgerwin]

You'll be able to fund school. However, that is a really large mortgage. I don't know your circumstances, but it seems a little ridiculous for you parents to saddle you with so much debt.

 

[lord_jeebus]

Horrible idea, unless they have $400,000 in cash as collateral - which I doubt considering the fact that they want to use you to get a mortgage.

I don't know if it would affect your student loans though.

 

[dragonfly99]

It won't. He/she will still be able to get a student loan (well, I mean the gov't backed Stafford...it might and probably would affect being able to get private loans, but hopefully you won't need those).

Your parents shouldn't be using your good credit for their own purposes though...what if YOU need to borrow money for a home in 4 or 5 years, but you've still got that huge 400k mortgage on your financial records? They are being unfair to them. Maybe you should try to convince them that it would/could hurt your chances to get private student loans, which you might theoretically need at some point during med school. Maybe that would deter them...I think they are just being really selfish, and obviously they got themselves into financial trouble anyway, or they could get their own mortgage. By the way, my parents have never lived in a house worth more than 150k...probably even 100k...plus they helped pay for a lot of my undergrad, and a little of my med school. Instead of helping you with school, etc. it seems that yours are trying to take advantage of you. My opinion is you shouldn't let them...but I know it's probably easier said than done.

 

[mamitch4]

DO NOT for any reason allow anyone to take out a mortgage loan in your name with your credit. This is just a horrible idea. I have seen this situation play out with some of my family members. The potential for disaster is huge, and even if works out relatively smoothly from a financial standpoint, the strain that it puts on relationships is unfortunate. 👎

 

[strongboy2005]

By the way, my parents have never lived in a house worth more than 150k...probably even 100k...

Wow... I have NEVER seen a house that cheap...

A "regular" house where I live is at least $350,000

 

[TMP-SMX]

Wow... I have NEVER seen a house that cheap...

A "regular" house where I live is at least $350,000

Not everyone lives in shacks in California that are 350k.

 

[dragonfly99]

What's your definition of a "regular" house?
I can totally believe that, though, if you you live somewhere like a big city in California, or in New York or Chicago. That's beside the point, though. The point is, it's really not fair of your parents to be doing this to you. It won't be "them taking out a big mortgage in my name". It will be, "Me taking out a big mortgage to allow my parents to have a house, for which I'll be financially responsible". They need to fix their own credit (could be done in only a few years) and then reapply for a loan at that time.

 

[lammoush09]

Hi everyone,

I recently bought a house for 100k .. it was foreclosed and this bad economy is obviously the time to buy. I hope to be in medical school this fall, and I'm wondering a few things:

1. How, if in any way, will this affect my financial aid? I know someone above said that it shouldn't affect the government loans, but how likely is it that I will only be using govt loans to pay for my education?

2. I know that fin aid usually encompasses cost of living, because most medical students cannot really work while going to school. Will it then take my monthly mortgage payment into consideration? Does it take any/all bills that we may have (cell phone, utilities, etc..) into consideration?

3. Would anyone recommend taking on the military and/or public health programs to help pay for things? Is anyone on here actively involved in one of those programs?

 

[TMP-SMX]

Hi everyone,

I recently bought a house for 100k .. it was foreclosed and this bad economy is obviously the time to buy. I hope to be in medical school this fall, and I'm wondering a few things:

1. How, if in any way, will this affect my financial aid? I know someone above said that it shouldn't affect the government loans, but how likely is it that I will only be using govt loans to pay for my education?

2. I know that fin aid usually encompasses cost of living, because most medical students cannot really work while going to school. Will it then take my monthly mortgage payment into consideration? Does it take any/all bills that we may have (cell phone, utilities, etc..) into consideration?

3. Would anyone recommend taking on the military and/or public health programs to help pay for things? Is anyone on here actively involved in one of those programs?

1) You can still get $40,500 in Federal Stafford loans. It is going to depend what your cost of attendance and whatever other assets you have plus aid or offers you get from your school whether it will fulfill your tuition, fees, and cost of living. We need to know which school you will be attending to know what your cost of living will be depending on the tuition and living expenses. Grad plus has no limit and as long as you have no bad credit history in the last five years you can get it with no questions asked. You can also seek out private loans but in general they should be avoided.

2) Usually schools have a standardized budget that should include enough for everything in the cost of attendance. However, depending on all of your bills and how much you pay for the mortgage they may adjust it if you need more. However, keep in mind that they won't take car payments, credit card payments, debt, or loans into account. The important thing is to talk to the financial aid office for that as they are the final say and you can't get any more aid "above the line" for your cost of attendance.

3) People usually recommend against taking on these programs unless you are genuinely interested in the military, practicing in a rural area, etc. if you just need the money. In general, the HPSP is pretty stringent in many ways but if you want more information stop by the Military Medicine or Public Health Service forums.

 

[nontrdgsbuiucmd]

Another consideration, unless you all have spoken with a real estate broker already is the debt to income ratio required. Lenders will require you to prove you have sufficient income to pay back the loan, not just good credit.

Years ago, a lender would go up to maybe .35 debt to income - meaning a loan requiring payment of up to 35,000 per year could be taken out for each 100,000 of income a person makes. for a 400K mortgage ( you'd mentioned a 400K liability) over 30 years at 5.5%, you would have to prove current income of $78,000 per year, presuming you have no other debt (student loans, car loan, credit card). The math gets messy, but a 400K loan amortized over 30 years at 5.5% would come out to $2,271 per month mortgage payment - do you have this income? (rhetorical qu).

(this presumes the loan would only be in your name; your parents' income could be included if you were taking out the loan jointly with them)