HELP! Entering escrow and loan coming down the pipeline!

[moneypenny02]

Hi all!  I am really in need of help/guidance.

I amazingly got into contract on this house that I love.  In doing so, I had to remove the loan contingency.  I already got pre-approved, and in speaking with the lender, he said that he had no concerns about me getting ultimate approval. (I have scores above 770, sufficient income with w-2, etc., only student loan debt with a max payment of about $500/mo)

Now, YESTERDAY, I get an email from my grad school.  I had a loan with them for about $29k.  It would be forgiven completely if I went into a particular field for 5 years after graduation.  It ws deferred for a year because of a fellowship, and this is now the first year that it would potentially be due.  I now have to confirm with them whether I am in that particular field, and I am not.  The loan will now enter repayment on a 10 -year schedule.  They had not previously reported it to any credit agency, so it did not show up on my credit scores, or Dept. of Education loan summary, etc.   I have no idea what to do now.  

They want confirmation by Sept. 30th as to my current employment. I am not sure when the loan will then be shown on my credit report, but if it is within the next 30-45 days, I will be screwed.  My scores will plummet, I am sure, as it will show up as a NEW $29k loan. The monthly payment should actually not be so huge as to significantly impact my DTI, and the mortgage we are getting is about $50k less than I was approved for.  My main concern is my credit, because that impacts my interest rate and PMI.  The loan is owned by my school so I will try to talk to someone to see if they can defer me for a month or two, or even let me pay in advance for some number of months in order to refrain from reporting it yet, but absent any arrangement that I can come to with them, what should I do?

Should I flag this with my lender?  Should I try to see if we could do a 15-day escrow period?  When do they do the last credit-pull?

[tooleman694]

Lol is this a joke. If not take a pill, or drink a beer.

[moneypenny02]

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@tooleman694 wrote:

Lol is this a joke. If not take a pill, or drink a beer.

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Um, not sure how this seems like a joke.  Your response was rude and pointless.

People are advised all the time not to buy a car, or open a credit card, or do anything that would significantly impact their credit anytime before the loan closes.  I have a "NEW" $29k loan about to show up on my credit report and I am just entering escrow.  That seems pretty major.

[foofighter74]

Well, if it doesn't have a huge impact on your DTI...in other words, if even with the loan payment your ratio's still qualify, then that certainly helps.  It's not a new loan in the sense that you went out and bought a new car, or $10,000 worth of furniture in anticipation of getting a new house....and it's an installment loan.  We got a new car shortly before applying for a mortgage, and the impact on our credit scores wasn't much more than 10 or 11 points...my guess is that you will still have qualifying scores.

But i would address it right away with your loan officer.  I wonder if there will be some issue with not disclosing this during the application phase. You're supposed to tell them about all debt, and even though this wasn't due when you applied...you knew that it would eventually come up.   

As for a final credit check, nobody checked our scores before we closed. The last time scores were pulled was right at the outset of our application process and we qualified pretty easily.  Whether they did a soft pull of our credit or not right before closing i can't say, but obviously, that happens quite often and any "new" accounts would definitely show up.

Maybe the worst that happens is that you have to go back to underwriting and get re-approved with the loan.  Regardless...again, it's not like you applied for new credit.  But you did know about it and may face some difficulties by not disclosing it.

[tooleman694]

It could be major, but since your scores are thru the roof and its not causing DTI problems it doesnt matter.

If you were border line with credit, like 100 points lower then you are at now. Then yeah I would be worrying a bit.

[moneypenny02]

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@foofighter74 wrote:

Well, if it doesn't have a huge impact on your DTI...in other words, if even with the loan payment your ratio's still qualify, then that certainly helps.  It's not a new loan in the sense that you went out and bought a new car, or $10,000 worth of furniture in anticipation of getting a new house....and it's an installment loan.  We got a new car shortly before applying for a mortgage, and the impact on our credit scores wasn't much more than 10 or 11 points...my guess is that you will still have qualifying scores.

But i would address it right away with your loan officer.  I wonder if there will be some issue with not disclosing this during the application phase. You're supposed to tell them about all debt, and even though this wasn't due when you applied...you knew that it would eventually come up.   

As for a final credit check, nobody checked our scores before we closed. The last time scores were pulled was right at the outset of our application process and we qualified pretty easily.  Whether they did a soft pull of our credit or not right before closing i can't say, but obviously, that happens quite often and any "new" accounts would definitely show up.

Maybe the worst that happens is that you have to go back to underwriting and get re-approved with the loan.  Regardless...again, it's not like you applied for new credit.  But you did know about it and may face some difficulties by not disclosing it.

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Thanks!  I will flag it with my lender today.  I honestly did not realize that it wasn't already included in my Dep't of Education summary and thought that it was included in my consolidation earlier this year---until yesterday.  Will follow up with him today.

[moneypenny02]

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@tooleman694 wrote:

It could be major, but since your scores are thru the roof and its not causing DTI problems it doesnt matter.

If you were border line with credit, like 100 points lower then you are at now. Then yeah I would be worrying a bit.

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Okay, that makes more sense.  

I was/am worried about the credit score issue because, although I was over 800 when I first got pre-approved, when I last checked my FAKO scores this month, I had fallen to about 772 (mid-score) due to a credit card closing due to age, credit inquiries, and other things.  The loan officer said that as long as I stayed above 770 that I would be fine, and I think that it is likely that this loan will put me under.  Not sure what the full ramifications of that would be--perhaps just slightly higher rate, but we also bid on the house based on the rates that he said we could get--and that was based on being at 770+.  So, even though it may not stop us from getting A LOAN we may end up with a higher monthly payment than we planned/budgeted for if this new item substantially affects my rates & PMI, and that would be a big deal to us.