Lien on Property and Student Loans?

8 Replies

Hey all,

My wife and I are considering getting a new property.  We currently own a condo but I'm the only one of the loan.  My wife has student loans and I know in some states that liens will be put on mortgages when people have student loans. 

We live in Texas and we do have homestead in Texas.  Does anyone know if we're at risk for that?

Thanks!

Never heard of student loans becoming a lien.   Step one, talk to a local loan officer to see if you/she qualify in general.

I have never heard of a lien on the mortgage.  I think you mean a lien on the property. Her student loans will count in the debt to income ratio.  I don't know if they can lien the property but the only reason for a lien would be if you don't pay the student loans.  If that is the case you need to get your financial house in order before buying another property. They don't usually discharge student loans even in bankruptcy so you are obliged to pay them.  

I never heard of that either. I just closed on a property and the bank did count my student loan as debt in their equation of debt to income.  As long as you have more income coming in and assists you should be fine.

There are three things that have no statute of limitation: murder, treason, and student loans. The only way you can get rid of your student loans is my paying it off. 

If you are paying are paying your student loans on time you should have not have any problem getting a loan if your debt to income ratio is low. If you are having issues with your loans and you still want to pursue real estate investing try lowering your monthly payment or consolidating your loans through federal government. I assuming you are using financing to purchase this property. 

Michael Henry, Real Estate Agent in WI (#56929-90)
(414) 617-1740

Jason, 

What you mentioned, Student Loans encumbering (or similar) a mortgage does not exist.  It can not exist.  No such thing.  

A Mortgage/Deed of Trust is an interest in the real property.  A third party can not lien that interest.  Nor would they want to.  It is something you already gave to someone else.

It is possible that IF your student loan defaults and the holder of that loan obtains a judgement, that the judgement can be used to lien your property or garnish your wages.  That is a lengthy process and obviously requires a default for anything to even happen.  I don't think you are inquiring with something like that imminent.  

It is true, student loan debt may not be discharged to some degree.  


We're not behind on student loan payments, which seems to be the only possible condition for a lien to take hold. 

Thanks! -Jay

@JASON D.   here is a trick that works in nc but also you have to have good credit and actually find a bank that holds there notes.  Form an llc just for this house assuming it will be your personal house and then just personally guarantee it.  (Have the mortgage in the llc name dot etc)This is also a good way to eliminate this property from liability if something were to happen to you personally ie. Traffic accident, you get sued for something you possibly default on the student loan etc.  this keeps the property separate from your personal affairs.  

@JASON D.  and yes there is no way they can lien the property from a student unless default and they receive a judgement  which will pop up in s title search once you sell the house.

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