Sticker debt and mortgages Forum

[BruceWayne]

For those of you who have taken out sticker debt or are planning to do so, what exactly do you plan to do when it comes time to look at purchasing a home? I'm assuming that you have 200K type debt. I'm especially curious about those who have that type of debt but are not going to be working in biglaw.

[ManOfTheMinute]

For those of you who have taken out sticker debt or are planning to do so, what exactly do you plan to do when it comes time to look at purchasing a home? I'm assuming that you have 200K type debt. I'm especially curious about those who have that type of debt but are not going to be working in biglaw.

LOL - LRAP. Or they don't exist.

[A. Nony Mouse]

What is this "purchasing a home" of which you speak?

[stillwater]

For those of you who have taken out sticker debt or are planning to do so, what exactly do you plan to do when it comes time to look at purchasing a home? I'm assuming that you have 200K type debt. I'm especially curious about those who have that type of debt but are not going to be working in biglaw.

cool thread dude. who buys a house anymore? this is the 1950s

[BruceWayne]

For those of you who have taken out sticker debt or are planning to do so, what exactly do you plan to do when it comes time to look at purchasing a home? I'm assuming that you have 200K type debt. I'm especially curious about those who have that type of debt but are not going to be working in biglaw.

LOL - LRAP. Or they don't exist.

Although you will be on LRAP, won't banks still look at your income to debt ratio?

[homestyle28]

As a general matter, mortgage and other consumer lending decisions are based on monthly payments, not overall debt-loads. If a person with large student debt wants to maximize the amount he can borrow, you maximize the length of your student loan repayment (say by choosing the 20 year repayment plan). Obviously having another large monthly obligation cuts into your buying power, but sticker debt doesn't preclude home ownership.

[redbullvodka]

I don't see the reason for biglaw people to buy before at least ~29-30. It's not clear you're going to be in the same place for an extended period of time (might change cities when you get up/outed). Plus you have to build up a downpayment -- I think I'd rather pay down debt than sock away money for that.

Biglaw, by 29-30, has put enough of a dent in their loans (or ideally paid them off) that the debt/income should be no problem.

[jkpolk]

As a general matter, mortgage and other consumer lending decisions are based on monthly payments, not overall debt-loads. If a person with large student debt wants to maximize the amount he can borrow, you maximize the length of your student loan repayment (say by choosing the 20 year repayment plan). Obviously having another large monthly obligation cuts into your buying power, but sticker debt doesn't preclude home ownership.

BOOM ROASTED

[BruceWayne]

As a general matter, mortgage and other consumer lending decisions are based on monthly payments, not overall debt-loads. If a person with large student debt wants to maximize the amount he can borrow, you maximize the length of your student loan repayment (say by choosing the 20 year repayment plan). Obviously having another large monthly obligation cuts into your buying power, but sticker debt doesn't preclude home ownership.

Oh OK that changes things then. I wasn't aware of that. That means that someone on IBR etc. would actually be seen as having a rather low monthly payment obligation assuming, like you said, they don't have other large monthly payment obligations.

[rad lulz]

What is this "purchasing a home" of which you speak?

[PRgradBYU]

What is this "purchasing a home" of which you speak?

Srsly. I'm all about landing dat BigLaw and moving in with my parents.

[rad lulz]

What is this "purchasing a home" of which you speak?

Srsly. I'm all about landing dat BigLaw and moving in with my parents.

That's what I am doing now actually (thought not at a biglaw firm)

[PRgradBYU]

What is this "purchasing a home" of which you speak?

Srsly. I'm all about landing dat BigLaw and moving in with my parents.

That's what I am doing now actually (thought not at a biglaw firm)

You're a smart bro. No need to make mortgage payments on top of loan payments.

[stillwater]

i endorse "urban camping"

[buddyt]

Possible to buy a house while you still have a job before you start school? That's what I did; granted, I live near my state flagship, plan to work in the area, raise my future family here, and my mortgage is dirt cheap, so it wasn't all that reckless.

[homestyle28]

As a general matter, mortgage and other consumer lending decisions are based on monthly payments, not overall debt-loads. If a person with large student debt wants to maximize the amount he can borrow, you maximize the length of your student loan repayment (say by choosing the 20 year repayment plan). Obviously having another large monthly obligation cuts into your buying power, but sticker debt doesn't preclude home ownership.

Oh OK that changes things then. I wasn't aware of that. That means that someone on IBR etc. would actually be seen as having a rather low monthly payment obligation assuming, like you said, they don't have other large monthly payment obligations.

That's the way the underwriters I talked to before law school explained it to me. Someone on IBR would probably be placed on the lower end of the up-front ratio scale because of the uncertainty of their payments, but most lenders will be satisfied with a letter from big fed stating what the obligations will be for the next year.

[Rory19]

As a general matter, mortgage and other consumer lending decisions are based on monthly payments, not overall debt-loads. If a person with large student debt wants to maximize the amount he can borrow, you maximize the length of your student loan repayment (say by choosing the 20 year repayment plan). Obviously having another large monthly obligation cuts into your buying power, but sticker debt doesn't preclude home ownership.

Oh OK that changes things then. I wasn't aware of that. That means that someone on IBR etc. would actually be seen as having a rather low monthly payment obligation assuming, like you said, they don't have other large monthly payment obligations.

That's the way the underwriters I talked to before law school explained it to me. Someone on IBR would probably be placed on the lower end of the up-front ratio scale because of the uncertainty of their payments, but most lenders will be satisfied with a letter from big fed stating what the obligations will be for the next year.

This is exactly the same but I recently applied for an unsecured loan with ~$40,000 in undergrad debt that's I'm income contingent repayment right now with my payments at $0 (I have a solid full time job but live in a region with cheap cost of living so in other area my income would seem low). The bank said that when they ran their report they calculated my monthly income compared to my monthly payments for my debt to income ratio. Though my monthly payment through ICR is $0 they still had to use a nearly $1300 figure because income based repayment, like many LRAP programs are not for sure since your income could go up at any time and this your monthly payment could shift. I just went through this at Wells Fargo. Maybe LRAP is different but this interpretation made me very nervous to take on any additional law school debt.

[guano]

If you can afford the payments, they'll lend you the money (as long as you have an acceptable credit score).
Mortgage lenders are willing to lend you far more than you can afford.

[BruceWayne]

If you can afford the payments, they'll lend you the money (as long as you have an acceptable credit score).
Mortgage lenders are willing to lend you far more than you can afford.

I thought those days were over (for good reason)?

[guano]

If you can afford the payments, they'll lend you the money (as long as you have an acceptable credit score).
Mortgage lenders are willing to lend you far more than you can afford.

I thought those days were over (for good reason)?

Nope. They've stopped lending to people with nothing, but they'll still let you borrow about 1.5 times as much as they should.

Your own rule of thumb should be that total debt should not exceed 3-4 x annual income. Mortgage lenders will let you go to 5x (and possibly higher)

[sinfiery]

Why would they care? They can just take your home for collateral. Nbd.

[Bronte]

Why would they care? They can just take your home for collateral. Nbd.

They tend to lose money in foreclosures. Foreclosures are time consuming, have high transaction costs, and result in depressed sale prices. But yeah this does increase their willingness to lend.

[HarlandBassett]

For those of you who have taken out sticker debt or are planning to do so, what exactly do you plan to do when it comes time to look at purchasing a home? I'm assuming that you have 200K type debt. I'm especially curious about those who have that type of debt but are not going to be working in biglaw.

lol

[guano]

Why would they care? They can just take your home for collateral. Nbd.

I guess you haven't read a newspaper in the past five years

[BruceWayne]

For those of you who have taken out sticker debt or are planning to do so, what exactly do you plan to do when it comes time to look at purchasing a home? I'm assuming that you have 200K type debt. I'm especially curious about those who have that type of debt but are not going to be working in biglaw.

lol

Contrary to popular TLS opinion there are a lot of people in this boat--like myself for instance.