Hi everyone! I have tons of law school loans but would like to take advantage of the dropping housing prices in San Diego and I feel that I am ready to own a home. But the problem is that my loans put my DTI at a high rate. I have both private and my federal consolidated student loans with Sallie Mae. I've spoken with Sallie Mae several times, but I'm getting the same answer. They tell me that I can likely get a 12 month deferment or forbearance for my federal consolidated loan. However, with my private loans, they can only defer them for 6 months at a time. So that is not going to make our FHA underwriter happy. Has anyone had any luck getting Sallie Mae to defer both private and federal loans deferred for 12 months? Please share. Other than making more money, I think that is my only option; well, that OR go back to school half-time to get the in-school deferment. Your thoughts??? thanks in advance.
I'm not sure I understand your question. It seems like you are asking how to get a deferment on your federal and private law school loans for a full year. It sounds to me like you know how to do that (because Sallie Mae told you how). And it sounds like they will defer your private loans for a second six-month period, you would just have to re-up. Remember that even if you get those loans into a deferral or forbearance status, those loans (in their total) still show up in your credit reports. The DTI is based on your total debt reporting on a given credit report--not your monthly payments in a given month. That is a different kind of DTI than folks are usually discussing on this board. The more relevant question is whether putting the loans into deferment or forbearance status would have any impact at all on DTI (either kind), and in my own experience with my own law school loans, the loans - deferred or not - still count when applying for more loans (not so much with credit cards).
My bigger worry (if I were you) is that if I'm trying to show more cash on hand available in each month in order to qualify for a loan, that amount of cash on hand will change (decrease) when you have to start paying the student loans again. Unless you're going from a federal clerkship to biglaw, I don't see how a regular incremental increase in income from a law firm (or worse - public interest!) job is going to cushion that switch back to repayment from deferral unless you're looking at some big promotions or bonuses. I guess there might be a difference between what you have to show in order to qualify versus the reality of what you make and your monthly outlays. However, at the point that you have to stop paying some of your debts in order to either qualify for a mortgage (counterintuitive), or in order to pay your mortgage (unwise), that may show some financial instability that would make it difficult to either qualify for, or to continue to pay, a mortgage.
If I'm understanding your question correctly (?), it seems to me that feeling ready to own a home is different from being financially ready to purchase a home. Regardless, the market hasn't hit bottom yet (especially in CA)--so you might be able to do better on purchase price (and down payment) in another six months.
And don't even get me started on going back to school to get an in-school deferment. Would you go down to part-time working, or go to school at night? Unless you can pay for tuition outright (without taking on more student loans!), this really should not be an option that you seriously consider.
Bottom line, I don't think that putting your student loans into deferment will help you achieve your goal of homeownership. And if it does (for example, if that's what your FHA underwriter is suggesting), then for the reasons above, you should seriously consider whether that is really financially feasible in terms of maintaining a current status on your mortgage and all other obligations.
Thanks for your response. What I am trying to do is show lower monthly payments, so that is why I want to get my loans deferred. By the time we get into a house, I will have paid off all of my credit cards and I don't have a car payment. So my only bills would be my school loans and mortgage (and regular monthly bills). thanks.