Mortgage, Med School Loans and Taxes

[honsano]

Ok so my fiance and I are looking to buy a home. We are going through process righ now actually. It sucks. I spoke to a fellow resident who reminded me that mortgage interest is tax deductible up to like 850K (or some obscene number). Okay cool. For my student loans, I get a capped tax deduction of 2K as long as I make under about 65K (may be off a few K) and like 1K if I'm making under 125K (again likely to be off a bit but the idea is the same)

To me it seems that I should somehow transfer my student loan debt to home debt. I'm not sure how to do this or if it is even possible but financially it appears much more appealing than my status quo.

Is it possible to conslidate a mortgage with student loan debt (after residency of course when I can actually have enough money to pay for both) to allow the the total interest to be tax deductible? Is another option to take out a second mortgage to allow for the greater tax deductions? What other sorts of creative money management have you people tried?

I realize that paying your loans back ASAP is the best strategy, however, what else have yall employed to save a little more green? Thanks

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[EM_Rebuilder]

Pretty certain the answer is 'No' in your case.

If you could 'purchase' your house with CASH, and then get like a HELOC against the home and use that to pay the loan back. However, I am assuming if you had the cash, you would pay off the loan and not buy the house with it.

 

[dotdash]

You could do something like what you are talking about by putting less downpayment on the house, thereby having more mortgage debt, and using the extra money to pay down (or off) the student loan. It requires a lot of cash and flexibility, however. And you might get a worse rate on your mortgage with lower down payment.

Also, one of the possible items on the federal budget-cutting candidate list is the mortgage interest deduction. I think they have mentioned cutting the deduction for mortgages over $500K.

Taking out the HELOC to pay off your student debt is an idea, but check the tax code (state and federal, they can be different). Not all HELOC interest is deductible, I believe, only that used for home purchase or improvements.

 

[The White Coat Investor]

You need equity to pull this trick off amigo. Perhaps if you buy a severely undervalued house, then in a few months can get it appraised much higher, then do a cash-out refinance and pay off the loans, you could do it.

Otherwise, you're stuck with the age-old method of working hard, living cheap, and paying off the loans. I wrote a blog post about living like a resident you might find interesting:

http://whitecoatinvestor.com/live-like-a-resident/

 

[honsano]

Hey guys, I appreciate the responses. Looks like the only free lunches are those I got in college when pretending to be in certain student organizations. Dang