Finances, Uncategorized

Can I Afford A House And School?


“My husband is going into a masters program and at the same time I’ll be entering a program at a different school. My program would be full time, requiring me to quit my job. Here’s my question, when we start these programs we will have to move closer to the school. Have any of you been on student loans and also had a mortgage? We’d prefer to buy a house, because we’ve been renting for so long and want a place of our own, but my husband doesn’t think they’d approve us for both a student loan ($10,000-$15,000) and a mortgage. Has anyone done this before?”

I totally get the pressure of buying a house and not wanting to throw away money. We are in this mode where we think that we have to be making really smart financial decisions in order to have a good, financially safe future. We are also surrounded by people our age, or a little older, doing big things like buying nice cars and nice house-and we feel like we need to keep up. The interesting thing is, if you can be patient and wait a few years, you will probably elevate yourself to a MUCH better situation than you could imagine.

First of all-house prices are incredibly high right now. People are offering ABOVE asking price and ABOVE what houses are worth because inventory is 1/3 of what it normally is. So it’s a seller market-NOT a buyers market. I actually work with people who are in GREAT financial positions right now because they have sold their home at a high price, made a lot of money and are now renting until prices come down again.

With getting back into school, and losing a large amount of income-I would say hold off on buying a home. Is your husband still working? Can you live on his income alone?  It might feel like you are wasting money, but think about it this way. If you wait a few years until home prices come down (which they will) and your income goes up because of your combined educational accomplishments (which it should) you will actually be in a better position down the line to make bigger payments. Bigger payments mean you will pay LESS interest on your loan, which will actually save you money in the long run. A LOT of it.

As an example: If you have a mortgage of $850, in your first payment, only $55 of that goes to principle. $55! So the start of a new mortgage loan is the perfect time to start making extra payments. Anything that you are able to pay extra will be actually contributing to your mortgage instead of just interest. $200 in extra payments will actually be 4x the amount that usually hits your principle balance. So the way I see it, if you can’t afford to waste money on rent-you better be able to afford paying a lot extra on your mortgage payment. Otherwise it really isn’t worth it-and that’s not taking into account taxes, insurance, maintenance and repairs.

If I were you, I would rent a cheap apartment, save your money for school and a down payment and not have the stress of a mortgage payments on your back. If you have extra income after that-get a little crazy and go on a fun vacation when you guys are on break from school. There has to be SOME benefit to not working, right?