Student Loan/Mortgage Solution

[Talima719]

After reading a few posts these past couple days, it's possible that there is a solution to the mortgage/student loan 1% rule.

Instead of a IBR type of repayment plan, if you have over 30k in student loans, you (we), have the option to either consolidate the loans for 30yrs or use the Extended plan for up to 25yrs.  This will fully amortize (fully payoff) the loan.  Ultimately, helping our DTI ratio.  I understand that some people still may have to go the IBR route where their monthly paymet will be $0.  But in a few short weeks, it's not acceptable anymore.

So...In everyones unique situation, what equation is better? 1% of your total loan debt or a payment plan stretched out over 25-30yrs to qualify for your dream home?!

[Anonymous]

I too subscribe to this plan. I've switched to the extended repayment plan for the purpose of getting a home and will switch back as soon as the loan is funded and the keys are in my hand. Went from paying $145/month to $460, but that is better than the 1% which would have been $680/month.

[Anonymous]

I'm actually withdrawing from school for the summer semester so that I can get all my loans out of deferment and consolidate to get 30 year payments. It is the only way I can document what my payment wiill be and that the loan wiill be fully amortized.

And it is the only thing my lender wiill accept for proof of my future payment.The consolidation loan payment is going to be a LOT less than the 1% that the mortgage company wants to use. Then I'll go back to to school, defer the loans and eventually do an IBR repayment.

Its sad that I have to drop out just to buy a house but I cant qualify for much of a mortgage using the 1% rule. So I have no choice really. The process needs to be changed by our government because this rule leaves a lot of students and former student out of the housing market.

[mrsjr]

I've applied to two lenders this week and both of them told me that they would accept my IBR payment.  Did they BOTH lie to me?

[Anonymous]

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@mrsjr wrote:

I've applied to two lenders this week and both of them told me that they would accept my IBR payment.  Did they BOTH lie to me?

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Not if you're going FHA. You have until 6/30 to get a case number assigned so you'd qualify with IBR under the old rules.

[dashpt]

No, some lenders are still using the old guidelines untill june 30th, they just have to make sure they order your fHA case number before then......My case number should be ordered today....

[Anonymous]

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@mrsjr wrote:

I've applied to two lenders this week and both of them told me that they would accept my IBR payment.  Did they BOTH lie to me?

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In addition to what the others have said, Freddie Mac (conventional) will still accept IBR if the payment is above $0. That will probably go away soon to be in line with Fannie Mae and FHA.

[sherizel73]

The problem is though trying to find someone who will underwrite to Freddie Mac without overlays. 

[Anonymous]

Bump

[Anonymous]

I had to do this. Was at 10yr repay, consilolidated and did 25yr repay to get dti down to qualify. I plan on leaving it at 25 yr but pay extra once i get into a house. Trying to get a mortgage that will be cheaper than rent so i can pay even more twds sl principal. Goal is to pay loans back within 4yrs and finally breathe again!