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Getting Married- loans

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  • Getting Married- loans


    I am making 200k and my future wife just started as an attending making 170k first year post residency (family medicine). My loans: 320k was refinanced at 4.75% on a 15 year term in June 2018 and pay $2500/month. It is at $290k currently. My fiance has approx. 60k in loans and she is currently on REPAYE still since she started working only a couple months ago, her taxes for 2019 were resident salary. She is paying approx. 400/month. She is applying for the State Health Program & Behavioral Health Program which is a 3 year service obligation and pays up to 70k. She will find out this June if she is accepted, it has approximately a 1 in 3 acceptance rate.

    Loan Recap Today
    His- $290k @ 4.75% 13.5 Years left. Plan is to refinance and get a lower interest rate.
    Hers- $60k in the range of 5-6%.For the tax year 2020 we will get married and file together, due to both our incomes she won't qualify for REPAYE as far as I know so in 2021 will she be put on IBR? Her clinic site has the requirements for the scholarship so we hope she is accepted. If we don't get the scholarship at that point should we keep hers on IBR and then refinance? The thought is to keep the current monthly payments as low as possible in hopes of getting the scholarship and then if not, refinance privately.

    Other financials:
    - $215k in HYSA and checking accounts between the two of us. We are planning on buying a home this year. I understand we can pay off my loans quickly then buy the house later, that might be a separate topic so I'll try to avoid that discussion but open to criticism.
    -$90k combined in Roth and 401k Retirement Accts
    -$45k in a taxable account


  • #2
    Your loans: definitely refi now.
    It seems you are set with close to 2 years in your job.
    Her situation is the variable. New job, loan and the clinic she is going to work at. Factor in a marriage and many adjustments.
    • Wait a year for the house. Her employment situation and the scholarship situation and the job adjustment will work out.
    The point is not to have the house debt influence her choices. With a new marriage, I would think you want the ability for her to make a change even if she got the loan repayment scholarship.
    • Getting her settled is the goal. Her loan shouldn’t impact that at $60k. Let the dust settle and then deal with the house purchase.
    •MPMD gave you good advice, simply suggesting keeping the home mortgage on the sidelines for a year. Gives her and you a lot more flexibility. No need to burden her career choices. Different clinic, different preference for commute. You can always payoff her loan.


    • #3
      170k is low for FM. Why is she considering a 100K pay cut? Even if it does pay off her loans you cannot afford that right now. Her loans are not the problem. Yours are. I suggest get down to a 1-2 month EF and use all extra cash to wipe out the loans. I would even consider draining the taxable account if you can do so with minimal taxes.
      If you cannot wait to buy a house then use a physician loan. That what those are for. For people who have better uses for their money right now.
      You can get a sub 4% physician loan and then build up cash and refinance possibly in the future after the student loans are gone.

      Good luck


      • #4
        I would refi the student debt to a 5-7 year term.

        I personally would not use your savings to pay down debt - this is a great time to borrow money at historically low mortgage rates.


        • #5
          Originally posted by MPMD
          nice work on the combined salary.

          question #1: on $370k is it even worth refinancing that $60k? If she doesn't get the scholarship why not just pay it off right away?

          question #2: are you letting the tail wag the dog? in other words is she applying to this job just for that scholarship? because $170 sounds low even for FM.

          you are sitting on $260k in cash with a mountain of debt. you're def going to get some comments about that. i think most people are going to tell you you'd be better off at least blanking out her loans even if you have to put down less on the house. your educational debt is 4-5% and your mortgage is going to be lower than that even with an MD loan even on a 30. plus you are going to be exchanging debt w/ no tax benefit for debt with tax benefit.

          another thing to think about here (although i wouldn't overplay this) is that people are pretty worried about this market -- corona, bernie etc. i wouldn't look at a guaranteed 5% return too negatively at the moment.

          i don't know OP... i'd probably take my house fund down to about 15% of purchase price (10% down and 5% for incidentals/moving/etc) and drop those loan balances.
          Thank you for your insight MPMD. #1: Great point. To Lordosis point- my loans are the actual problem.
          #2: No, I see why it looks that way. She is dedicated to this CHC, rural, underserved and she did her residency through them at another satellite clinic. Base offering was ~200k, she is 0.8 FTE so hence the 160k. The clinic has multiple sites so even if we have to move a little she can stay with them.

          Sorry, your comment about 5% return with the market speculation i.e., bernie, corona, went right over my head. What 5% return are you referring to? Paying off the debt? Thanks!


          • #6
            Originally posted by xraygoggles View Post
            I would refi the student debt to a 5-7 year term.

            I personally would not use your savings to pay down debt - this is a great time to borrow money at historically low mortgage rates.
            Guess it's time to start shopping. Thanks for the insight Lordosis, that is the max her CHC offered. Based off everyone's input, I'll see what I can do about getting a physician loan and some sort of combination of investigating refinancing to wiping out a chunk of debt.