Refinancing house to pay off student loans?

[rereredundant]

Hey guys, I have a question that I haven't truly found an answer for online and was wondering if you all had some input. I am currently in my 2nd year of a 3 year pharm D program and my fiancee is a practicing pharmacist. Her loans are currently in the 120k-ish area and most of her monthly payments are going towards the interest.

Her family has the house in her name and I was wondering if refinancing the house to pay off the student loan would be a wise move. I know that she will save a bundle on interest, but a concern that we both have is the potential effect of the mortgage when we purchase our own home in a few years. Will this negatively impact any potential first-time home buyer advantage that we may have? We are both from Southern California and do plan to live there after I finish up, so housing will be in an expensive and competitive market.

Any help would be greatly appreciated

---

Members don't see this ad.

 

[Stroganoff]

I wouldn't bother refinancing and just cashflow it. If she's a practicing pharmacist, there's enough coming in there to aggressively attack that entire debt in 1 year of income, maybe 2.

I recently found this blog: http://nomoreharvarddebt.com/2012/03/29/mission-accomplished/

That post is the "Mission Accomplished" summary post. It's a long read but worth it. The guy graduated with his Harvard MBA with over $100K of student loan debt. He had a six-figure salary and formed a gameplan to pay off the entire debt amount in like 7 months. It's such an inspiration.

Just depends how badly you want it.

 

[rereredundant]

I wouldn't bother refinancing and just cashflow it. If she's a practicing pharmacist, there's enough coming in there to aggressively attack that entire debt in 1 year of income, maybe 2.

I recently found this blog: http://nomoreharvarddebt.com/2012/03/29/mission-accomplished/

That post is the "Mission Accomplished" summary post. It's a long read but worth it. The guy graduated with his Harvard MBA with over $100K of student loan debt. He had a six-figure salary and formed a gameplan to pay off the entire debt amount in like 7 months. It's such an inspiration.

Just depends how badly you want it.

Thanks for the link, it was a good read but I find some of his tactics pretty extreme. I know you mentioned to forget about refinancing, but what exactly would be the downside? As it stands, she has no write-offs and is taxed the full amount. She recently accepted a new job as well, and while this does wonders for her physical and mental stress, it also amounts to a lower salary (~$110,000). We have no qualms with managing the debt over time but we just really want to know if refinancing the house now will have any effect on purchasing our own home in the future.

 

[rereredundant]

Is there a con to refinancing though? We are just worried about the potential impact on purchasing our own home in the future when she already has a mortgage in her name.

 

[sazerac]

If she already owns a home, then whether she has a mortgage on it or not shouldn't affect her first time home buyer status. If I remember correctly, you only qualify if you haven't owned a home for five years, but don't take my word on that one.

People mortgage multiple houses all the time. The bank wants to see that your total loan payments are less than a certain amount. If you refinance your student debt, your existing loan payments ought to be lower, making you look better.

I will leave it for others to address the question you are asking... Will an existing loan on an unused home somehow damage your application in some way? Is there some sort if discount for only having one mortgage? Is there a penalty for having a second mortgage? I don't know.

But it is extremely important that you realize one fact: student loans come with built in death / disability insurance. If the borrower dies, so does the loan. Home mortgages do not, because they are secured by the property, not the future income of the borrower. So if you do decide to swap the student loan debt for house debt, remember to also purchase death / disability insurance too.