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Should You Pay Faster or Pay Less?

As you're preparing to buy a home and figuring out your financial plans, you might wonder, "Should I pay off my student loans faster, or should I pay less each month?" Good question! Let's dig into this.
Conventional wisdom often tells us to pay off loans quickly, but that's only sometimes the best choice for everyone. Are there times when it's better to pay less? Absolutely!
Here are a couple of essential factors to think about when deciding if you should pay less or pay more quickly:
⚡️Your employer: If you work for a public services organization like a school, university, nonprofit hospital, city, state, or county government, or any other kind of charitable nonprofit, then you could be eligible for Public Service Loan Forgiveness (PSLF). This means you can pay less based on your employment rather than your income.
⚡️Your income: If you earn less than 1.5 times your total student loan debt each year, you might also be an excellent candidate to pay less. For example, this could be if you earn $30,000 a year and owe $45,000 in student loans or if you earn $200,000 and owe $350,000.
Even if you work in the private sector, you can still qualify for an income-driven repayment plan based on your debt-to-income ratio. But remember, private-sector loan forgiveness programs are less generous than public-sector ones. You might be making payments for a more extended period and face a "tax bomb" or taxation on the amount forgiven.
If you work in the public sector, your student loan debt can be forgiven after 120 on-time qualifying payments, and it's not taxed. Plus, you don't have to make those payments consecutively. So if you leave the public sector and then return, you can pick up where you left off.
⚡️Some critical things for you to think about:
Could you keep track of your qualifying payments? You can do this by looking at your student loan data file, or LoanSense can tell you this on your "My Loans" dashboard.
Know when you need to file your annual paperwork. This is called your "IDR Anniversary date." Could you make sure to file ahead of this date each year to avoid an increase in your payment?
Understand which paperwork you need to file each year. If you're trying to qualify for PSLF, you must file two annual forms - your employer verification form and your IDR renewal paperwork.
Know which plan will save you the most money - REPAYE, PAYE, IBR, or ICR.
If you're married, determine how filing your taxes will impact student loan payments. Can you file separately and save more money?
Paying faster is the right choice if you're in the private sector, have a stable income, and owe less in student loans than you earn in a year. For instance, paying off your loans quickly is a good strategy0,000 a year, and you owe $80,000 in student loans, primarily if you work in the private sector, you earn $10.
⚡️Some questions for you to consider:
Can you make larger monthly payments to pay off your loans faster?
If you want to pay your loan off quicker, have a stable job, and are close to cutting your payoff timeline to 5 years, have you considered refinancing your loan?
Remember, understanding your options is the key to making the best financial decisions. If you have any other questions, feel free to let me know.

Reviews

"I have worked with a good number of lenders personally and professionally over the years, and our experience with Walt and his team was by far the best experience I have had. For the refinance of our home mortgage, I had obtained quotes from other lender relationships, but no one could commit to closing any faster than 45 days. And, no one beat Waterstone Mortgage's fees and rates. Walt committed to closing within 30 days, and his team delivered: Walt spent the time needed to understand our needs and recommend loan options to meet those needs (and the options exceeded our expectations); Mayra pleasantly and efficiently walked us through the application process; and Ann worked closely with us to expeditiously move through underwriting to closing. All in roughly 3.5 weeks. They communicated with my wife and me effectively throughout the process so that there were no surprises. In addition to our genuine appreciation for the speed and results of their services through closing, we are also grateful that we can continue to turn to them as our primary contact over the life of the loan. We could not have asked for a better experience and would recommend Walt and his team at Waterstone without hesitation."

brian moore

"We used Walt and his team when we purchased our new home in Salem. We had a short close, but it was no problem for them. They were very responsive and were available when we called. We were very impressed with their professionalism and we appreciated Walt meeting with us for the Discovery Consultation. This was a great opportunity to ask questions and learn more about the process. We highly recommend Walt and his team!"

eyes503

"Walt and his team are an actual delight to work with! At the beginning of my process I was disappointed with a lender, switched to Walt and holy smokes he exceeded my expectations right off the bat! He brought me to the office and laid out everything that was going to happen and multiple options to go about it. Everything was step by step, as a first time homebuyer your have many questions and he is well aware of that. He closed my house in 30 days and got me great rates! He responded in a timely manner to every question I had and I couldnt of been luckier to have such a informative, supportive and professional team to help me through this crazy process. I have to give a huge thank you to Walt and Lenda from the very bottom of my heart!"

katie braff

"I would highly recommend Walt's Schulz from Waterstone Mortgage and his team to do business with in any future purchases of a home. This was not my first home purchase but went so quickly and timely each set of the way and they were to do items on weekends that kept the process moving. So as a very satisfied customer we were able to close ahead of schedule!! Great job Walt!!"

rickterry589

"Walt and his team are incredible. As first-time buyers, we had a TON of questions and Walt patiently went through all our options until we felt confident. We closed in 18 days and when the interest rate dropped soon after, he called us to suggest refinancing and walked through that process with us. Everything was smooth and efficient and they were always available if we had questions. Could not recommend them more highly"

mcmurchy family

"We had such a great experience with Walt and his team. We were first home buyers and really nervous about buying a home. We needed to learn about the process. We had worked with another company when we first started looking for a house and our communication was so poor. They didn’t like me asking questions and were frustrated with my lack of experience. When I switched over to Waterstone Mortgage it was a night and day difference! Everyone was so eager and willing to answer all my questions. They went at my pace and were super supportive. They made sure we understood all the details and the process of buying a home before we started anything else. This was exactly what I needed!! Our home buying investment became such a positive experience for us! Thank you Waterstone Mortgage for your support!!"

makenzie pineda

"Walt and his team did an excellent job and made the mortgage process painless. I was able to handle the process up to closing virtually, which really made things simple with my busy schedule. The team was very timely with their responses to my questions. I’ve closed on several mortgages over the years and felt this was by far the smoothest yet."

nick

"Walt’s group was great to work with, communicated well, was very professional, and have their processes/systems down so everything runs smoothly. We had a unique situation with the purchase of our home and Waterstone was able to loan on something my wife and I was not sure was going to be possible. Even after closing they have a great program that helps you understand how paying off a little more each month can save you over $100k and years off your loan. Awesome team and would highly recommend."

user3775684

"Walt and team were great to work with. We were happy to get approved and get into a house in a timely manner. Closed a few days ago, now for the move in.."

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