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Yes, another SL/Mortgage loan question for the experts

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Anonymous
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Yes, another SL/Mortgage loan question for the experts

Hi All, 

 

Thanks for your expertise in advance.  I am currently on a standard (10year) payment plan with my student loans and as it stands my ratio is 16/41.  I am in the process of saving for 20% down and am looking to get pre-approval Oct 2016.  I will not have the entire 20% at that time if I stay on my current plan but will have it just barely by close (new build) in March/April 2017.  Someone offered up that I would need the entire 20% in the bank at pre-approval and I would do better to shoot for 20% at pre-approval rather than cutting it so close to actual close.  I agree, good advice.  

So in crunching the numbers and talking to my student loan company it looks like I can change my repayment for 24 months and go with a graduated repayment plan.  I would save enough in the 1st year to meet my Oct 2016 20% down pre-approval deadline for build to be complete in spring 2017 and with that payment my ratio would be 16/29, the downside is at 24 mos the loan payment will be higher than it currently is and would throw me into 43.5% back end ratio if I had to use the new number.  

 

My question is how are these loan payments calculated at the time of close.  Do you have to provide a letter outlining the future payment schedule or do they go by the payment that is currently reporting on the credit report?  Based on my timeline my graduated (lower) payment would change over to the higher payment in Oct 2017 but I would close in Mar or Apr 2017 so the higher payment would kick in around 6 mos later.  Would that be a factor?  I searched and searched but couldn't find any definitive answer on loan payments that increase/change 6 mos from close.  Based on what I read re: IBR my guess is that loan payments that stay stable for 12 mos will use the lower payment but if the loan is set to increase at 6 mos then I assume they would use that number but how is that info obtained by the mortgage lender? What do I have to provide during the mortgage process.  Also would it be better to wait and apply for the change in repayment status closer to 1 year prior to close so the payments would remain unchanged in the immediate 12mos from close, ie change repayment April 2017 so they payments would be lower for 24 mos and at least 12 months from close.

 

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1 REPLY 1
Anonymous
Not applicable

Re: Yes, another SL/Mortgage loan question for the experts


@Anonymous wrote:

Hi All, 

 

Thanks for your expertise in advance.  I am currently on a standard (10year) payment plan with my student loans and as it stands my ratio is 16/41.  I am in the process of saving for 20% down and am looking to get pre-approval Oct 2016.  I will not have the entire 20% at that time if I stay on my current plan but will have it just barely by close (new build) in March/April 2017.  Someone offered up that I would need the entire 20% in the bank at pre-approval and I would do better to shoot for 20% at pre-approval rather than cutting it so close to actual close.  I agree, good advice.  

So in crunching the numbers and talking to my student loan company it looks like I can change my repayment for 24 months and go with a graduated repayment plan.  I would save enough in the 1st year to meet my Oct 2016 20% down pre-approval deadline for build to be complete in spring 2017 and with that payment my ratio would be 16/29, the downside is at 24 mos the loan payment will be higher than it currently is and would throw me into 43.5% back end ratio if I had to use the new number.  

 

My question is how are these loan payments calculated at the time of close.  Do you have to provide a letter outlining the future payment schedule or do they go by the payment that is currently reporting on the credit report?  Based on my timeline my graduated (lower) payment would change over to the higher payment in Oct 2017 but I would close in Mar or Apr 2017 so the higher payment would kick in around 6 mos later.  Would that be a factor?  I searched and searched but couldn't find any definitive answer on loan payments that increase/change 6 mos from close.  Based on what I read re: IBR my guess is that loan payments that stay stable for 12 mos will use the lower payment but if the loan is set to increase at 6 mos then I assume they would use that number but how is that info obtained by the mortgage lender? What do I have to provide during the mortgage process.  Also would it be better to wait and apply for the change in repayment status closer to 1 year prior to close so the payments would remain unchanged in the immediate 12mos from close, ie change repayment April 2017 so they payments would be lower for 24 mos and at least 12 months from close.

 


The answer to the question above in red, is yes. If a lender sees a payment amount other than zero on the credit report, that is the one they will use. I consolidated my own student loans into graduated repayment myself, and it takes about 90 days from the date of request to first (graduated) payment. I'd give yourself a good 4-6 months between consolidation request and pre-approval. You will likely not have to provide any documentation regarding your student loans if you go this route. As long as you close before the graduation "bumps up" to the next level you are fine. Best of luck!

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