Consolidating Debt Advise

[durtynole]

To all the Locker Room Billionaires out here, I humbly come for your advise. My wife just finished up her PHD program (Sorry no pics) and we are looking to start consolidating our debt and seeing what is the best way to go. I will lay out our main financial picture:

Student loans: $98,000.00
Main Residence: Owe $330,000.00 - Market Value at $530,000.00
Rental Townhouse: Owe $90,000.00 - Market Value at $205,000.00

I would not like to refinance either of my properties because i have them at a lower interest rate that is currently available. Ideally i would like to get a fixed term, fixed rate loan that would cover the student loans.

What avenues do you guys think would be the best to go about this. Thanks in advance.

 

[Urban Cryer]

If you can get 205k for the rental town home I'd dump that and pay off the student loan, unless you're making enough off of the rent to pay the student loan bill. Some forecast another real estate bubble in the near future, so I'd rather unload a rental home at a higher value than risk it losing out big time, then you're stuck with a mortgage and student loans.

That's a lot of debt to have on your back, are you able to invest for retirement at all?

Oh, get your wife to work asap!!!

 

[FSUTribe76]

To all the Locker Room Billionaires out here, I humbly come for your advise. My wife just finished up her PHD program (Sorry no pics) and we are looking to start consolidating our debt and seeing what is the best way to go. I will lay out our main financial picture:

Student loans: $98,000.00
Main Residence: Owe $330,000.00 - Market Value at $530,000.00
Rental Townhouse: Owe $90,000.00 - Market Value at $205,000.00

I would not like to refinance either of my properties because i have them at a lower interest rate that is currently available. Ideally i would like to get a fixed term, fixed rate loan that would cover the student loans.

What avenues do you guys think would be the best to go about this. Thanks in advance.

When did you consolidate your student loans? For example, I have about $80k in student loan debt from law school as I was only on half scholarship, but I consolidated when the fed rate was zero so I'm on the hook for only 2.3%. That probably doesn't even keep up with inflation so I'm paying nothing but the min payment for as long as I can.

 

[BrianNole09]

When did you consolidate your student loans? For example, I have about $80k in student loan debt from law school as I was only on half scholarship, but I consolidated when the fed rate was zero so I'm on the hook for only 2.3%. That probably doesn't even keep up with inflation so I'm paying nothing but the min payment for as long as I can.

What law school did you go to?

Not trying to stalk you...just curious. I live in the lawyer capital of the world, LOL.

 

[durtynole]

When did you consolidate your student loans? For example, I have about $80k in student loan debt from law school as I was only on half scholarship, but I consolidated when the fed rate was zero so I'm on the hook for only 2.3%. That probably doesn't even keep up with inflation so I'm paying nothing but the min payment for as long as I can.

Tribe, have not consolidated yet. Looking for best options now even with straight up consolidation.

Also selling the townhouse is last resort. It brings in decent cash and rentals are increasing in demand. Wife is currently working and underpaid. We think an issue opportunity to match her skillset should come this year. And yes we are putting a little away each paycheck for retirement and also for my daughters college.

 

[FSUTribe76]

What law school did you go to?

Not trying to stalk you...just curious. I live in the lawyer capital of the world, LOL.

Bill and Mary. I was on half scholarship that basically made me the same as in state residents.

 

[FSUTribe76]

Tribe, have not consolidated yet. Looking for best options now even with straight up consolidation.

Also selling the townhouse is last resort. It brings in decent cash and rentals are increasing in demand. Wife is currently working and underpaid. We think an issue opportunity to match her skillset should come this year. And yes we are putting a little away each paycheck for retirement and also for my daughters college.

Well with the Stafford student loans you should always wait and consolidate once when the Fed Rate is at its lowest as it never fluctuates. That's why I took advantage of the post-911 free money the Fed was giving away. It was actually back at zero again last month or so the first article I pulled up on google said and they only recently raised it, so you should probably consolidate the Staffords immediately as the Fed rate isn't likely to go back to zero anytime soon. The other student loans will fluctuate but you can permanently fix your Stafford cheap. Definitely verify what I said about the fed rate though:

 

[cmanole]

Seriously? You're sitting on 315 thousand dollars of equity and can't figure out how to eliminate 98k of debt?

 

[goldmom]

Unload the townhouse- unload debt.
I'm sorry but that's a no brainier.

 

[noleclone2]

I am curious with a wife getting her Ph.D. and having that much student loans how you built so much equity in those two properties given the real estate issues the last 8-9 years.

 

[vevois23]

I am curious with a wife getting her Ph.D. and having that much student loans how you built so much equity in those two properties given the real estate issues the last 8-9 years.

Depending on when and where he bought, it isn't a stretch. There were plenty of places that were not hit by the bubble, as well as others where the bubble effects weren't as severe. He mentions that rental demand is up in his area, so that is probably driving the value of that property. As for his main house, it simply could have been a situation where he either bought a foreclosure on the cheap and the area was a good area. I say this b/c that is what I did. East side of Tally. Bought for $190k, currently valued around $250-275k, with that amount going up if a couple of pie in the sky sellers get their wish in my neighborhood.

 

[Bav803]

I am curious with a wife getting her Ph.D. and having that much student loans how you built so much equity in those two properties given the real estate issues the last 8-9 years.

Well, if they bought at the bottom of the bubble, then for sure it would be easy to have built that much equity.

 

[durtynole]

I am curious with a wife getting her Ph.D. and having that much student loans how you built so much equity in those two properties given the real estate issues the last 8-9 years.

I bought the townhouse straight out of college. When the market dropped is when i bought my current home pre construction. Market went back up. My house which i live in was just a blessing for us that it was perfect timing. The townhouse is just now getting to be above the value which it was purchased in in 2004.

I know that dumping the townhouse is the easiest and quickest solution but i only have 9 more years of payments left in it. Renting it at the moment brings in about $300.00 a month after mortgage, hoa and taxes. the rental market is increasing and i am looking at getting $100 more per month starting march when i get a new tenant. Also there would be additional considerations that would have to go to selling the townhouse such as commissions to Realtor and how ever many months i would have it unoccupied while i rent it. Also, Since we hope my wife will be able to substantially increase her income withing the next few years, we should be able to afford to get out debt without unloading the property.

I know that with the equity i have built up I have enough collateral for a loan to consolidate this. I have not done so yet because our current income did not allow us to make a fixed monthly commitment but with my wife getting her degree and certification we will soon be able to.

With all these in mind, my reason for asking here is just to see what avenues maybe out there that i am not aware of. I appreciate everyone's response.

 

[seminole97]

I say this b/c that is what I did. East side of Tally. Bought for $190k, currently valued around $250-275k, with that amount going up if a couple of pie in the sky sellers get their wish in my neighborhood.

What year did you buy, and how much per sq.ft.?
We put a contract on our house at the end of 2010, got it finalized in Feb. 2011. It was basically at the 2004 price for the neighborhood. Been a while since I added sales since then to see how/if the 'hood has rebounded.
This is just the houses on my loop (~100 total houses in the neighborhood) that had sold since 2000 (some are in here more than once, some never turned over). I put this together at the time just to try and get a feel for whether or not I was catching a falling knife, or picking it up off the floor.

Person we picked up the short sale from had bought the house for $222k in 2008, we paid $177k. She had also done some upgrades, which was nice (added gas, installed gas range and fireplace, unfortunately we had just few a months prior bought a new washing machine and electric dryer for the place we were in at the time).

 

[cfbfan23]

With all these in mind, my reason for asking here is just to see what avenues maybe out there that i am not aware of. I appreciate everyone's response.

Since you aren't willing to sell or refinance right now, you need to wait for your wife to start bringing in more income to consolidate your student debt and take on a larger fixed payment. Which is what you're doing. Or you could make more. That's about it.

 

[vevois23]

What year did you buy, and how much per sq.ft.?
We put a contract on our house at the end of 2010, got it finalized in Feb. 2011. It was basically at the 2004 price for the neighborhood. Been a while since I added sales since then to see how/if the 'hood has rebounded.
This is just the houses on my loop (~100 total houses in the neighborhood) that had sold since 2000 (some are in here more than once, some never turned over). I put this together at the time just to try and get a feel for whether or not I was catching a falling knife, or picking it up off the floor.

Person we picked up the short sale from had bought the house for $222k in 2008, we paid $177k. She had also done some upgrades, which was nice (added gas, installed gas range and fireplace, unfortunately we had just few a months prior bought a new washing machine and electric dryer for the place we were in at the time).

Around $82/sqft in early 2013.The place was vacant for 4 years so it needed some TLC, but I cannot complain about the work vs the payoff.

 

[SeaPA]

I am curious with a wife getting her Ph.D. and having that much student loans how you built so much equity in those two properties given the real estate issues the last 8-9 years.

I wondered the same. I also wondered, if you've accumulated that amount of equity while she was working through a PhD, why the hell are you looking for financial advice from a message board full of clowns who haven't accomplished nearly as much financially?

 

[SeaPA]

Btw, couple other questions:
1. Can wife dance?
2. Can she integrate a pole into her dance moves?

 

[seminole97]

Around $82/sqft in early 2013.

The place was vacant for 4 years so it needed some TLC, but I cannot complain about the work vs the payoff.

Vacant for years in Florida can be scary. Nature reclaims quickly.

 

[durtynole]

Btw, couple other questions:
1. Can wife dance?
2. Can she integrate a pole into her dance moves?

1. not as good as she used to but i am sure the rust will knock off.
2. i will suggest this and let you know how it goes. I maybe having to move into the townhouse after this question gets asked.

 

[NoleRN]

One thing to consider, which blind sided us, is how the payback terms of student loans are calculated. It's based on a rate of 10% based your adjusted gross income. If you file jointly like most married folks her monthly payment will be based on joint AGI not solely her income.

 

[vevois23]

Vacant for years in Florida can be scary. Nature reclaims quickly.

Work blocks imgur so I cannot see your pic.

It wasn't too bad. A French door had to be replaced, and some minor landscaping (the bank had been maintaining it for a while) other than that it was just a new roof as the major expense. All in all it was a net gain.

 

[seminole97]

It wasn't too bad. A French door had to be replaced, and some minor landscaping (the bank had been maintaining it for a while) other than that it was just a new roof as the major expense. All in all it was a net gain.

I remember when reading about the foreclosure glut in Florida mention of houses getting moldy with no HVAC for long periods, but good inspection ought to keep you in the clear there.

 

[Fijimn]

I'd say if your rate on the debt is low (I would expect sub-3.0%) and you don't have a problem making those payments as well as maximizing retirement/college savings/savings, then just carry the debt. However, I have never been a fan of single rental properties. The ROR is not that great on one piece of property - when you account for the property and income taxes/hoa and general sweat equity you have to put into it.

 

[Semiologist]

I bought the townhouse straight out of college. When the market dropped is when i bought my current home pre construction. Market went back up. My house which i live in was just a blessing for us that it was perfect timing. The townhouse is just now getting to be above the value which it was purchased in in 2004.

I know that dumping the townhouse is the easiest and quickest solution but i only have 9 more years of payments left in it. Renting it at the moment brings in about $300.00 a month after mortgage, hoa and taxes. the rental market is increasing and i am looking at getting $100 more per month starting march when i get a new tenant. Also there would be additional considerations that would have to go to selling the townhouse such as commissions to Realtor and how ever many months i would have it unoccupied while i rent it. Also, Since we hope my wife will be able to substantially increase her income withing the next few years, we should be able to afford to get out debt without unloading the property.

I know that with the equity i have built up I have enough collateral for a loan to consolidate this. I have not done so yet because our current income did not allow us to make a fixed monthly commitment but with my wife getting her degree and certification we will soon be able to.

With all these in mind, my reason for asking here is just to see what avenues maybe out there that i am not aware of. I appreciate everyone's response.

The simplest way to tell whether you should sell the townhouse.......are you paying more than $300/month towards interest on your student loans?

 

[ncnole1975]

Tribe, have not consolidated yet. Looking for best options now even with straight up consolidation.

Also selling the townhouse is last resort. It brings in decent cash and rentals are increasing in demand. Wife is currently working and underpaid. We think an issue opportunity to match her skillset should come this year. And yes we are putting a little away each paycheck for retirement and also for my daughters college.

Be careful consolidating loans with private lenders. If you have any federal backed loans, do not consolidate them. The federal loans are eligible for years and years of deferment, reduced payment plans, and sometimes complete write-offs. Once you consolidate, all of that goes away and you are no longer eligible for any government assistant programs that may become available