Mortgage Loans

[whoathere]

I am looking for some insight from you guys and gals. I'm purchasing a townhouse on an FHA loan through the IHDA program here in Illinois. To get the free 3% down, you have to meet certain criteria (credit score, DTI, price range). I meet all of the criteria, except DTI. The reason is because of my student loan consolidation. Now, bear with me as I try to explain. My car payment is $400. I can restructure that loan at $260 a month with no extra money down. My student loans are as follows: Private loan 1 payment $80. Private loan 2 payment $100. Dept of Ed loan payment $161 and consolidated loan payment $142.

Now, I'm in the process of consolidating the DOE loan and the "special" consolidation loan, but they are having issues with how to code the loan and the system is erroring out. It's as problem of the DOE to get resolved and then my consolidation (second consolidation) will go trough. This would take my $161 payment and the $142 and combine them for a payment of $191. I already know the $191 is what my payment will be.

My question is, how will the underwriters view this? I've been told that I either need to get my car under $240, or get the student loans consolidated before I can get down below 45% DTI. After car restructure and student loans I'll be at 41%.

I was also told to have my current lender for my $142 payment put me on forbearance until the consolidation goes through, which wipes out that $142 and puts me well under.

Anybody have any clue as to how underwriting would view this situation?

Thanks in advance and I hope I'm not too confusing!

[lolabelle]

I had a somewhat similar situation at the end of last November when I was looking to get pre-approved.  My loans at the time were in in-school deferment, so a bit different fact scenario, but with the same outcome - that being that what was documented as my monthly payment obligation was, in fact, higher than what I would actually be paying once I was able to choose a repayment plan.

Unfortunately, the underwriter would only go by the documentation the lender would provide.  And since the lender wouldn't let me choose a repayment plan prior to coming out of deferment, I was stuck with the higher amount.

Are you able to get any documentation from the lender that your loan payment will be $191 once the in-process consolidation is finalized?  If so, maybe that would help.  

[whoathere]

I think I may be able to get documentation. Part of my consolidation has gone through, which lowered a payment from $252 to $161. When I filed the paperwork they gave an estimated payment of $180, but when I called back to check on how thugs were going currently, they confirmed my payment would actually be $191 when its all said and done. They also recommended I ask for forbearance until the consolidation goes through and made it sound like this is normal procedure.

If I can get forbearance and documentation stating that my payment wouldn't be anymore than $200, I could just restructure my car and then I'd be well under. This would make me very happy!

The loan officer is speaking to the underwriters and will get back to me tomorrow. I'll let you guys know the outcome

Thanks!

[lolabelle]

I would worry a little about forebearance just because it might throw you back into that place where you can't choose a repayment plan until the forebearance ends, in which case your documented repayment obligation would be based on the "Level" plan, which may be quite a bit higher than the $191.  That may not be the case, but definitely something to look into before you make the forebearance request!

Good luck!