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Question:


My fiancé has a ton of student loans. We’re getting married next year, so we’ll need a home – any type of home – to live in. What is the best way to juggle student loans with a mortgage or apartment rent?
-Soon-to-be-Mrs.


Answer:


The amount of your fiancé’s student debt should be factored in when determining how much you can pay in rent or on a mortgage, but it’s really beside the point as far as the decision of whether to buy or rent is concerned. It’s not clear that the decline in home prices has run its course, but it’s probably closer to the end than the beginning and surveys of affordability in many real estate markets show that it has become more economical to buy than to rent. If that’s true where you plan to live, then it remains true no matter how much student debt your fiancé has.
 
In deciding how much house (or condo or apartment) to buy, keep in mind that it’s always best to pay off the debt with the highest interest rate first. Unless the rates on your fiancé’s student loans are artificially low as part of a state or federal program, they probably will be higher than the rate you will be able to get on a mortgage. The best solution, therefore, might be to buy the home that meets your minimum standards for comfort, so that you can pay down the student loans as quickly as possible. Once you’ve knocked the balance down to a manageable level – pounds instead of a ton – you can think about trading up.
-Conrad de Aenlle



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