Is It a Good Idea to Roll Your Student Loan Debt Into Your Mortgage Payment?

Consolidating your student loan debt and your mortgage might seem like a good idea, but the drawbacks outweigh the benefits.

Buying a home? Click here to perform a full home search

Selling a home? Click here for a FREE Home Price Evaluation

Is refinancing a student loan and consolidating your student loan debt and mortgage a good idea? While this does bring with it certain benefits, there are many drawbacks to doing it too.

For one thing, reshuffling your debt is great, but it doesn’t make that debt go away. All you’re doing is moving it from one plate to another. It might make you feel better, but all you’ve really done is taken equity out of your home by increasing the debt on your mortgage.

For example, if you were to add $27,000 worth of student loan debt to a 15-year mortgage with a 5% rate, you’d add about $214 per month to your mortgage payment. And here’s the kicker: By setting that up on a 15-year loan (assuming you stay in the home the whole 15 years), you’d add $11,400 in interest to the life of your loan.

Also, if you lose your job while having a separate mortgage and student loan debt, your student loan payments could be deferred or slowed down. For a mortgage, though, there is no such provision if you lose your job, so if you have both debts rolled into one, you’ll have to keep paying your mortgage payment and your student loan debt.

If you were to add $27,000 worth of student loan debt to a 15-year mortgage with a 5% rate, you’d add about $214 per month to your mortgage payment.

On top of everything else, if you roll too much student loan debt into your mortgage and the market changes and decreases your home’s value, you might end up owing more for it than it’s actually worth.

So be cautious about rolling another payment into your mortgage or doing anything that might pull equity out of your home. It might seem like a good idea on the front end, but I think it’s probably a mistake on the back end.
 
If you have any questions about this topic or you’re thinking of buying, selling, or investing in real estate, don’t hesitate to reach out to me. I’d be happy to help you.