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Put my student loan in parents’ second mortgage - help?

Mortgage broker asking for a rate extension ($1,300) - is this fair?Protect Money Given Student Loan DebtIs this a valid strategy to reduce interest payments for student loans?Should I pay off a student loan before getting a mortgage, given I have a large deposit?What are my options for this high interest student loan?Why must my student loan payment be split instead of all toward highest interest?Should I get a Doctor's mortgage or a 15 or 30 year conventional mortgage?Keep my second 401k or pay a chunk of mortgage?To Cash-Out Refi or Not?Just graduated, what to do with cash gift

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1

I fear I did something stupid.

I graduated in 2017 with a bunch of student debt that my parents held on my behalf (~$130k). One misunderstanding led to another and somehow we ended up refinancing the student loan with a mortgage on my parent’s house. I was under the impression that this was going to be a lower interest rate than another refinancing option, but it doesn’t seem like it (6.5% interest rate).

The arrangement we currently have is that I pay the loan bill monthly (have been paying 2.5x minimum for almost 2 years).

Obviously, this rate is very undesirable and I should’ve done more research. Is there anything I can do to leverage that this was a past student loan?

If not, can I refinance this under my name for a lower rate? I suspect it’s a high rate because it is a second mortgage. I have a high credit score (~790), make about $130k/yr, am 24, and have assets (incl. retirement) of about $90k. I live in the US.

The current loan has a $110k principal remaining with a 10 year draw period and a 20 year repayment period.

united-states mortgage student-loan refinance

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edited 9 hours ago

smartButNotSavvy

asked 9 hours ago

smartButNotSavvysmartButNotSavvy

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1

I fear I did something stupid.

I graduated in 2017 with a bunch of student debt that my parents held on my behalf (~$130k). One misunderstanding led to another and somehow we ended up refinancing the student loan with a mortgage on my parent’s house. I was under the impression that this was going to be a lower interest rate than another refinancing option, but it doesn’t seem like it (6.5% interest rate).

The arrangement we currently have is that I pay the loan bill monthly (have been paying 2.5x minimum for almost 2 years).

Obviously, this rate is very undesirable and I should’ve done more research. Is there anything I can do to leverage that this was a past student loan?

If not, can I refinance this under my name for a lower rate? I suspect it’s a high rate because it is a second mortgage. I have a high credit score (~790), make about $130k/yr, am 24, and have assets (incl. retirement) of about $90k. I live in the US.

The current loan has a $110k principal remaining with a 10 year draw period and a 20 year repayment period.

united-states mortgage student-loan refinance

share|improve this question

edited 9 hours ago

smartButNotSavvy

asked 9 hours ago

smartButNotSavvysmartButNotSavvy

622 bronze badges

New contributor

smartButNotSavvy is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

add a comment | 

I fear I did something stupid.

I graduated in 2017 with a bunch of student debt that my parents held on my behalf (~$130k). One misunderstanding led to another and somehow we ended up refinancing the student loan with a mortgage on my parent’s house. I was under the impression that this was going to be a lower interest rate than another refinancing option, but it doesn’t seem like it (6.5% interest rate).

The arrangement we currently have is that I pay the loan bill monthly (have been paying 2.5x minimum for almost 2 years).

Obviously, this rate is very undesirable and I should’ve done more research. Is there anything I can do to leverage that this was a past student loan?

If not, can I refinance this under my name for a lower rate? I suspect it’s a high rate because it is a second mortgage. I have a high credit score (~790), make about $130k/yr, am 24, and have assets (incl. retirement) of about $90k. I live in the US.

The current loan has a $110k principal remaining with a 10 year draw period and a 20 year repayment period.

united-states mortgage student-loan refinance

share|improve this question

edited 9 hours ago

smartButNotSavvy

asked 9 hours ago

smartButNotSavvysmartButNotSavvy

622 bronze badges

New contributor

smartButNotSavvy is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

share|improve this question

edited 9 hours ago

smartButNotSavvy

asked 9 hours ago

smartButNotSavvysmartButNotSavvy

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New contributor

smartButNotSavvy is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

share|improve this question

edited 9 hours ago

smartButNotSavvy

asked 9 hours ago

smartButNotSavvysmartButNotSavvy

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New contributor

smartButNotSavvy is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

asked 9 hours ago

smartButNotSavvysmartButNotSavvy

622 bronze badges

New contributor

smartButNotSavvy is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.

asked 9 hours ago

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8

The student loans are gone, all lenders see is a 2nd mortgage. Since the mortgage is secured by the home you'd likely have a hard time getting a better rate on an unsecured loan, but it doesn't hurt to go chat with some lenders and see what options exist.

I imagine the best chance for a lower rate would be a re-finance on the first mortgage (assuming there's enough equity after both mortgages are factored in). Downsides on that would be muddling of the two mortgages, whereas now even though it's in their name you are paying a separate loan.

The most unfortunate consequences here is that you/they lost the ability to deduct the student loan interest paid.

It's certainly worth seeing if you can get a lower rate loan, but it's very possible that the fees/rates won't be compelling enough to go through the hassle. With your income level, the best option is probably to do everything you can to pay down that debt in the next couple years. At 6.5% I would forego all retirement investing other than 401k up to company match and pay down this debt in a hurry.

The good news is that you have healthy income and are young enough to quickly recover from an unfortunate interest rate.

share|improve this answer

edited 8 hours ago

yoozer8

2,40844 gold badges1111 silver badges2626 bronze badges

answered 9 hours ago

Hart COHart CO

39.4k77 gold badges9595 silver badges110110 bronze badges

• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  Thank you; this is exactly the advice I’m looking for. When you say “forego retirement investing”, does that mean on a go-forward basis or would you recommend liquidating all other liquid investments? For context, about half of that $90k is in my 401K/Roth IRA with the other half in a regular investment account
  
  – smartButNotSavvy
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy don't liquidate the retirement assets, but you may want to seriously consider using the non-retirement investment money to pay down the debt. It's hard to beat a 6.5% guaranteed return.
  
  – Kevin
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy Yeah liquidating retirement is typically too costly due to tax/penalties, if you happen to have a Roth IRA you could deduct the contributions and leave the earnings, but otherwise I'd just re-prioritize from here on out.
  
  – Hart CO
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy keep investing in the 401(k) at the minimum level needed to get the full company match. (Otherwise, you're taking a pay cut.) Build up an Emergency Fund, and then -- like the others have said -- hit that CC debt.
  
  – RonJohn
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  Even refinancing just the second mortgage right now may get a better rate without rolling it up with their first position mortgage. Rates are historically low right now. It doesn't hurt to talk to a bank or credit union and ask for options.
  
  – dwizum
  6 hours ago
  

  
  
  
  

add a comment | 

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8

The student loans are gone, all lenders see is a 2nd mortgage. Since the mortgage is secured by the home you'd likely have a hard time getting a better rate on an unsecured loan, but it doesn't hurt to go chat with some lenders and see what options exist.

I imagine the best chance for a lower rate would be a re-finance on the first mortgage (assuming there's enough equity after both mortgages are factored in). Downsides on that would be muddling of the two mortgages, whereas now even though it's in their name you are paying a separate loan.

The most unfortunate consequences here is that you/they lost the ability to deduct the student loan interest paid.

It's certainly worth seeing if you can get a lower rate loan, but it's very possible that the fees/rates won't be compelling enough to go through the hassle. With your income level, the best option is probably to do everything you can to pay down that debt in the next couple years. At 6.5% I would forego all retirement investing other than 401k up to company match and pay down this debt in a hurry.

The good news is that you have healthy income and are young enough to quickly recover from an unfortunate interest rate.

share|improve this answer

edited 8 hours ago

yoozer8

2,40844 gold badges1111 silver badges2626 bronze badges

answered 9 hours ago

Hart COHart CO

39.4k77 gold badges9595 silver badges110110 bronze badges

• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  Thank you; this is exactly the advice I’m looking for. When you say “forego retirement investing”, does that mean on a go-forward basis or would you recommend liquidating all other liquid investments? For context, about half of that $90k is in my 401K/Roth IRA with the other half in a regular investment account
  
  – smartButNotSavvy
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy don't liquidate the retirement assets, but you may want to seriously consider using the non-retirement investment money to pay down the debt. It's hard to beat a 6.5% guaranteed return.
  
  – Kevin
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy Yeah liquidating retirement is typically too costly due to tax/penalties, if you happen to have a Roth IRA you could deduct the contributions and leave the earnings, but otherwise I'd just re-prioritize from here on out.
  
  – Hart CO
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy keep investing in the 401(k) at the minimum level needed to get the full company match. (Otherwise, you're taking a pay cut.) Build up an Emergency Fund, and then -- like the others have said -- hit that CC debt.
  
  – RonJohn
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  Even refinancing just the second mortgage right now may get a better rate without rolling it up with their first position mortgage. Rates are historically low right now. It doesn't hurt to talk to a bank or credit union and ask for options.
  
  – dwizum
  6 hours ago
  

  
  
  
  

add a comment | 

8

The student loans are gone, all lenders see is a 2nd mortgage. Since the mortgage is secured by the home you'd likely have a hard time getting a better rate on an unsecured loan, but it doesn't hurt to go chat with some lenders and see what options exist.

I imagine the best chance for a lower rate would be a re-finance on the first mortgage (assuming there's enough equity after both mortgages are factored in). Downsides on that would be muddling of the two mortgages, whereas now even though it's in their name you are paying a separate loan.

The most unfortunate consequences here is that you/they lost the ability to deduct the student loan interest paid.

It's certainly worth seeing if you can get a lower rate loan, but it's very possible that the fees/rates won't be compelling enough to go through the hassle. With your income level, the best option is probably to do everything you can to pay down that debt in the next couple years. At 6.5% I would forego all retirement investing other than 401k up to company match and pay down this debt in a hurry.

The good news is that you have healthy income and are young enough to quickly recover from an unfortunate interest rate.

share|improve this answer

edited 8 hours ago

yoozer8

2,40844 gold badges1111 silver badges2626 bronze badges

answered 9 hours ago

Hart COHart CO

39.4k77 gold badges9595 silver badges110110 bronze badges

• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  Thank you; this is exactly the advice I’m looking for. When you say “forego retirement investing”, does that mean on a go-forward basis or would you recommend liquidating all other liquid investments? For context, about half of that $90k is in my 401K/Roth IRA with the other half in a regular investment account
  
  – smartButNotSavvy
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy don't liquidate the retirement assets, but you may want to seriously consider using the non-retirement investment money to pay down the debt. It's hard to beat a 6.5% guaranteed return.
  
  – Kevin
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy Yeah liquidating retirement is typically too costly due to tax/penalties, if you happen to have a Roth IRA you could deduct the contributions and leave the earnings, but otherwise I'd just re-prioritize from here on out.
  
  – Hart CO
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  @smartButNotSavvy keep investing in the 401(k) at the minimum level needed to get the full company match. (Otherwise, you're taking a pay cut.) Build up an Emergency Fund, and then -- like the others have said -- hit that CC debt.
  
  – RonJohn
  8 hours ago
  

  
  
  
  


• 
  
  
  

  
  

  
  
  
  
  
  

  
  
  Even refinancing just the second mortgage right now may get a better rate without rolling it up with their first position mortgage. Rates are historically low right now. It doesn't hurt to talk to a bank or credit union and ask for options.
  
  – dwizum
  6 hours ago
  

  
  
  
  

add a comment | 

The student loans are gone, all lenders see is a 2nd mortgage. Since the mortgage is secured by the home you'd likely have a hard time getting a better rate on an unsecured loan, but it doesn't hurt to go chat with some lenders and see what options exist.

I imagine the best chance for a lower rate would be a re-finance on the first mortgage (assuming there's enough equity after both mortgages are factored in). Downsides on that would be muddling of the two mortgages, whereas now even though it's in their name you are paying a separate loan.

The most unfortunate consequences here is that you/they lost the ability to deduct the student loan interest paid.

It's certainly worth seeing if you can get a lower rate loan, but it's very possible that the fees/rates won't be compelling enough to go through the hassle. With your income level, the best option is probably to do everything you can to pay down that debt in the next couple years. At 6.5% I would forego all retirement investing other than 401k up to company match and pay down this debt in a hurry.

The good news is that you have healthy income and are young enough to quickly recover from an unfortunate interest rate.

share|improve this answer

edited 8 hours ago

yoozer8

2,40844 gold badges1111 silver badges2626 bronze badges

answered 9 hours ago

Hart COHart CO

39.4k77 gold badges9595 silver badges110110 bronze badges

share|improve this answer

edited 8 hours ago

yoozer8

2,40844 gold badges1111 silver badges2626 bronze badges

answered 9 hours ago

Hart COHart CO

39.4k77 gold badges9595 silver badges110110 bronze badges

edited 8 hours ago

yoozer8

2,40844 gold badges1111 silver badges2626 bronze badges

edited 8 hours ago

yoozer8

2,40844 gold badges1111 silver badges2626 bronze badges

answered 9 hours ago

Hart COHart CO

39.4k77 gold badges9595 silver badges110110 bronze badges

answered 9 hours ago

Hart COHart CO

39.4k77 gold badges9595 silver badges110110 bronze badges