snowfox - you already have your dad's old fiddle so why not play it?  You say it needs strings - are the ones on it broken or can they be tuned up?  The bow isn't the best - does it still have enough hair on it and holds tension? Got some rosin? If you don't want to torture your family, wait till they're out of the house or go in the garage! If you do need strings or rosin - go to your local music shop or Amazon and get some $5.00 Black Diamond Fiddle Strings.  Yeah, lots of people don't like 'em but at this stage, as long as they vibrate they'll do the job.  Get out there and start playing!  Why wait till you get a new instrument?

Hmmm... I see your problem about practicing and not waking up your roommates.  If you work 2nd shift and get home at 11:30 at night and your roommates have to get up at 4:00 AM, I don't think a mute or even a "silent" electric is going to cut it.  I suggest you go to sleep right when you get home and wake up after your roommates are gone and practice!  Besides, that's when the rest of your neighbors are awake and likely gone to work too so you can play as loudly as you want.

I just got a Cecilio silent electric just like the one FM reviewed in his YouTube video except for color.  Actually got it before seeing his video, which is how I found this forum.  Love it - it's everything FM said it is, mine's the natural wood color and it's a gorgeous instrument - has some metallic in a sorta glossy rosewood finish.  But, it's not quite silent!  Even unamped, you and anyone in the room can hear it pretty good - it's a bit louder than playing an unamped electric guitar.  Put it this way, if you play it in the same room while they're trying to watch TV, it'll probably bother 'em.  I only play during commercials, and my family puts up with it just fine (so far!).  Leave the room and close the door and you'll be fine.  So it's much quieter than an acoustic, but don't expect it to be totally silent either.

As for using your dad's old violin, the cheapest strings you'll find are the Black Diamond Fiddle strings (and even made in the USA no less!) - Amazon has them for a bit over $5.00 with something like $2.50 in shipping. A mute is in the $5.00 range too and you can get really cheap rosin for a few bucks.  I'm all for supporting your local brick & mortar store so hopefully they'll be close in their pricing, so you should be able to get that fiddle in playing condition for fairly cheap.  And for a total beginner, any Violin Shaped Object will do just for practicing holding the violin and bow, etc. and practicing bow strokes and getting your fingers used to pressing the strings, up to playing something like Twinkle Twinkle.

This way, you'll have something to compare to when you do decide to get something else and who knows, you dad's fiddle might turn out to be a really fine instrument that's better than any entry level student violin - you won't know until you get it playable.