No. of Recommendations: 2
Thanks AJ, I will be selling current house using equity to put towards new house including additional funds for down payment. Are you suggesting to save for down payment in order to avoid PMI?

If you will have sold your current house before closing on the mortgage for the new house, then you will be less likely to run into DTI issues. However, unless your student loan minimum payment is based on a 30 year amortization schedule, the minimum payment for the $12k student loan will still be higher than the additional payment for adding $12k to a 30 year mortgage, even if the interest rates are the same. Therefore, if cash flow is going to be an issue, borrowing the extra $12k on the mortgage is probably a better option.

On the other hand, if the $12k would make the difference between having 20% for a down payment vs. having to get PMI, then I would say that putting the money toward the down payment is probably better option.

Just keep in mind, if you continue paying at $700/month, you will have the student loan paid off in 18 months. So, if you aren't planning on buying the new house for 2 years or so, you might be able to do both.

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