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southerngyrl82
Posts: 2
Registered: ‎10-18-2012
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Pre-Qualification/Pre-Approval Process

My husband and I just started the pre-qualification process today!!! I'm excited, but I also have questions about my student loans. Currently, I am in school to get my Grad degree so I am not making payments on my Undergrad loans. Also, I am getting a small student loan to pay for the classes I am taking now.

 

Does anyone know if this will affect our approval?

 

Please help???

New Contributor
Elcid89
Posts: 567
Registered: ‎10-04-2012
0

Re: Pre-Qualification/Pre-Approval Process


southerngyrl82 wrote:

My husband and I just started the pre-qualification process today!!! I'm excited, but I also have questions about my student loans. Currently, I am in school to get my Grad degree so I am not making payments on my Undergrad loans. Also, I am getting a small student loan to pay for the classes I am taking now.

 

Does anyone know if this will affect our approval?

 

Please help???


It depends on the loan program and the lender. FHA, for example, considers student loans against your DTI regardless of whether you are in repayment. VA doesn't if they are deferred when you go to buy. With a conventional lender, YMMV, but as a rule they will tend to count them. In their reasoning, which I agree with, you will be borrowing money from them for a long time, and your loans will go in to repayment while you're still repaying the mortgage.

 

It can dramatically reduce the amount that you qualify for. Run it by your LO, but unless your husband has abysmal credit, I would almost suggest not putting you on the mortgage, unless you just need your scores or your income to get what you are looking for.

 

The LO can explain everything and give you options to consider.

 

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New Visitor
southerngyrl82
Posts: 2
Registered: ‎10-18-2012
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Re: Pre-Qualification/Pre-Approval Process

Hopefully, we would be ok as I have no other debt besides the student loan and a car note which I am on with my husband. My husband does have some credit card debt though.

New Contributor
Elcid89
Posts: 567
Registered: ‎10-04-2012
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Re: Pre-Qualification/Pre-Approval Process

[ Edited ]

southerngyrl82 wrote:

Hopefully, we would be ok as I have no other debt besides the student loan and a car note which I am on with my husband. My husband does have some credit card debt though.


Get the LO to run it both ways - with both of you and with just him - under several different loan scenarios (FHA, VA, USDA, conventional, ARM, etc.). That way you can make an educated decision about which options best fit your needs. In a pre-qual, they are there to give you information, so make use of that.

 

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Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
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Re: Pre-Qualification/Pre-Approval Process

If your student loans are in deferment, they wont count against your DTI if you are going FHA.

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Elcid89
Posts: 567
Registered: ‎10-04-2012
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Re: Pre-Qualification/Pre-Approval Process

[ Edited ]

tooleman694 wrote:

If your student loans are in deferment, they wont count against your DTI if you are going FHA.


They don't have to count under FHA rules IF they are deferred for greater than 12 months from closing.  Lenders, however, remain free to include them in the DTI calculation if they wish, and most do.

 

HUD 4155.1 4.C.6.a

 

Debt payments such as a student loan or balloon note scheduled to begin or
come due within 12 months of the mortgage loan closing must be included by
the lender as anticipated monthly obligations during the underwriting
analysis.

Debt payments do not have to be classified as projected obligations if the
borrower provides written evidence that the debt will be deferred to a period
outside the 12-month timeframe.

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Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
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Re: Pre-Qualification/Pre-Approval Process

Mine are not being counted.

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Elcid89
Posts: 567
Registered: ‎10-04-2012
0

Re: Pre-Qualification/Pre-Approval Process


tooleman694 wrote:

Mine are not being counted.


Which is solely through your lender's good graces by choosing not to include something that it had the option to include. Including them tends to be the norm.

 

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Valued Member
bigboihill
Posts: 42
Registered: ‎04-09-2011
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Re: Pre-Qualification/Pre-Approval Process


Elcid89 wrote:

tooleman694 wrote:

Mine are not being counted.


Which is solely through your lender's good graces by choosing not to include something that it had the option to include. Including them tends to be the norm.

 


I would respectfully disagree with your statement that including them tends to be the norm.  This is not the case with FHA or VA, and is one of the reasons that so many people opt to go these routes when applying for a mortgage.  Every mortgage broker, banker, and lender that I have spoken to thus far states that they do not count student loans in DTI ratios if they are deferred beyond 12 months from closing.  I agree that it is not a requirement to exclude them, but I definitely would say that most will.

New Contributor
Elcid89
Posts: 567
Registered: ‎10-04-2012
0

Re: Pre-Qualification/Pre-Approval Process


bigboihill wrote:

Elcid89 wrote:

tooleman694 wrote:

Mine are not being counted.


Which is solely through your lender's good graces by choosing not to include something that it had the option to include. Including them tends to be the norm.

 


I would respectfully disagree with your statement that including them tends to be the norm.  This is not the case with FHA or VA, and is one of the reasons that so many people opt to go these routes when applying for a mortgage.  Every mortgage broker, banker, and lender that I have spoken to thus far states that they do not count student loans in DTI ratios if they are deferred beyond 12 months from closing.  I agree that it is not a requirement to exclude them, but I definitely would say that most will.


Well, then let me amend my statement to say that every FHA lender I've had to deal with thus far has included them, and YMMV. The OP basically needs to be aware that her lender MAY include them at its option and she needs to be aware of that possibility.

 

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