Banks only loan 50-60% loan to value on office and get paid back first. The equity gets zeroed out before the lender loses a dime. Also lots of office is financed by life insurance companies instead of banks. Finally, office is a small % of overall CRE.
In this case, if values drop significantly, they could still have loaned out quite a bit more than value. But that does seem to cap their losses at maybe 50-60%?
Whoa⌠what? How did that become a thing?
Good point, overall not sure most CRE is in good shape, but office seems to be in the worst shape.
Life insurance companies need to liability match, so they make long term fixed rate loans that roughly align with their fixed rate liabilities over a similar time period.
Uh oh. Time to short some banksâŚ
I think this is way too pessimistic, including for your personal situation. If rates start getting lowered in the next year, I bet most (including you) will be able to realistically buy a house as the market loosens up.
Whatâs going to keep prices from shooting up again if rates drop? My expectation is that if I keep working 60+ hours a week and my wife does the same when she graduates, within a couple years that might be enough. But youâre then talking about DINKs with above average incomes having to work 60+ hours a week to save up.
If we manage to get over that hump, I think weâll be fine, because then weâll be able to just work and cruise and build wealth and live life. Catching up to this runaway train and jumping on board is the tough part - frankly impossible for a lot of people. I have a couple cousins who donât even have a hope/plan of how theyâll ever buy a home. They have plans and they work hard, but their plans are just to work super hard and increase their hourly and their income and their expectation is that will just allow them to stay afloat as everything gets more expensive.
Itâs very gloomy for a lot of people.
Unless your wife is rolling in hundos in her new job (and congrats if she is), then you probably arenât taking into account that if she stays on an IBR plan then whatever isnât paid off after 20 years will be forgiven.
Not the new payment plans I donât think.
She went to community college to keep costs down and borrowed < $20K, so itâs basically impossible not to pay off the loans within a 10 year window, based on the numbers I was looking at.
Oh, yeah, $20k isnât much. I was thinking she had a lot more from nursing school.
Does she have any Perkins loans? She can likely get those forgiven after 5 years (and deferred for those 5 years), working as a nurse.
Here, if she has Perkins, make sure she does this (AND DOES NOT START PAYING THEM): Federal Student Aid
I got those fully forgiven after 5 years as âlaw enforcementâ but nurses get it too.
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Also donât consolidate anything or you lose this benefit.
IBR can be based upon your previous tax return, so yeah, if sheâs not making jack shit while going to school. My wife paid $0 for her first year in PSLF and it counted.
Thanks! I will check, but I donât think she does.
Ah, so we may be better off filing separately for now so that she can pay less her first year and it may get us some forgiveness in the end. I suppose if we experience any periods of unemployment or time off, that could help too.
My wife and I had to do Married filing separately for years because of this. Note that some plans (I forget which) consider income of both spouses even if MFS, while others do not. Student loans actually create a marriage penalty, unfortunately.
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Iâve been cruising along at my residency salary (56k/yr working 60-80hr weeks) on my IBR and will be 7 years through my PSLF before I have to update it to my attending salary (which is a lot more)
How in the world did you buy a home on a $56K/yr salary?
Obviously, the mortgage application had his post-residency salary which Iâd estimate is somewhere in the neighborhood of 5-10x that.
The stuff you submit for student loan calculations lags at least a year behind on salaries and generally speaking doctors always start first jobs in July so in addition to the year lag the first âreal yearâ actually is only 50% based on real salary. Covid made it even crazier , I think some people may be calculated on almost 4 year old data at times