Reply
Contributor
elleng81
Posts: 100
Registered: ‎12-10-2012

Student Loan consolidation vs. Rehab program

Question - I successfully completed a rehab program for four of my student loans last year. My loans have since been picked up by AES and the trade lines date back to 2006 with a positive payment history. I am now rehabbing four additional loans (I was not aware that I had 8 loans...). I have only made two payments so far.

 

My husband and I need to move. We are in a really bad school district and my son is starting kindergarten in August. We would like to go FHA because of the downpayment amount. My husband wouldn't be on the loan as we would keep our current home as a rental (I am not on that loan) and it is an FHA loan. I don't believe I can get an FHA loan because of my defaulted student loans, correct? Would consolidating them be more beneficial? Or a quick way to get on the federal government's good side?

 

Thanks!

Established Contributor
bahbahd
Posts: 729
Registered: ‎08-12-2011

Re: Student Loan consolidation vs. Rehab program

From everything I have heard, consolidation will not remove any of the past negative tradeline information. I think rehab is your best option. No quick way around that.

Established Contributor
InvincibleSummer3
Posts: 640
Registered: ‎11-20-2012

Re: Student Loan consolidation vs. Rehab program

You know, you might have better luck posting this in the Mortgage forum. I don't know that anyone here will know about FHA requirements....

 

But good luck!

Contributor
elleng81
Posts: 100
Registered: ‎12-10-2012

Re: Student Loan consolidation vs. Rehab program


bahbahd wrote:

From everything I have heard, consolidation will not remove any of the past negative tradeline information. I think rehab is your best option. No quick way around that.


I think I am okay with the negatives... my score is already mid 600s with them. I am just looking to move in the next six months or so and I don't believe I can get an FHA loan with my loans reporting as defaulted... if I consolidate wouldn't that open a new tradeline and the existing defaulted loans would be closed, right?

Contributor
elleng81
Posts: 100
Registered: ‎12-10-2012

Re: Student Loan consolidation vs. Rehab program


InvincibleSummer3 wrote:

You know, you might have better luck posting this in the Mortgage forum. I don't know that anyone here will know about FHA requirements....

 

But good luck!


I did that as well : )


Thanks!

Community Leader<br> Established Contributor</br>
Community Leader
Established Contributor
SCF
Posts: 942
Registered: ‎06-09-2008

Re: Student Loan consolidation vs. Rehab program

My understanding is that consolidating your loans does remove the default status, but I would confirm that with the banker you plan on working with for your mortgage.  Consolidation will open a new account, and that will cause a ding to your score, as well as impact your Average Age of Accounts.

 

Overall, your best move is rehab unless you there is no way you can wait the 9 months.


myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+