REVEALED: Paying Off Your Student Loan before Buying a Home Saves More Money!

student-loan-into-a-mortgage

Paying one loan with another loan is also referred to as debt reshuffling. Although  it might feel good to have one less bill to pay, debt reshuffling is not magic. You still owe the money–you’ve just changed the terms and possibly forfeited protections you might need later, but we’ll get to that in a moment.

The reality is that with consolidation it feels like you’re making progress, says Chris Hogan, financial coach and author of Everyday Millionaires. You’re taking this big chunk of student loan debt and getting rid of it.

Really, though, you are attaching that debt to your home in place of equity. It’s a move that requires careful consideration.

The goal of the home is for you to own it. What you’re doing is taking the equity out of your home immediately by the size of the student loan debt.

Debt to Income Ratio equation

 

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