Student loan re-deferment.

[Anonymous]

I just recently had my student loans deferred a year up to the projected closing date for the purposes of obtaining a FHA loan and mainly for debt-to-income ratio purposes. Well the closing date was moved yet again and my loan officer asked me to have them re-deferred (originally had the loans deferred until April 2013, now the loans have to be deferred starting in June) to fit the 12 month window. Has anyone been successful in getting the student loan holder to do this for the purposes of getting a home loan? I was told by one representative that deferments are granted 1 year at a time, and that the date cannot be changed. I hope that's not the case. Thanks. 

[cdtotten]

Student loans can be defered for many reasons, with the most common being: in school, economic hardship and inability to find full time employment. I don't think that purchasing a home is an eligible reason for deferment. Anyways, since they are already deferred, there will be a set date the deferment is good through, at which points the loans (and interest) will begin repayment again. You cannot change this date until you reach the end of the deferment period and reapply if necessary.

I will add that defering student loans to make your DTI better for a home purchase is a very bad idea. The reason DTI ratios exist is to determine if you will be safely able to repay all your obligations. Intentionally excluding certain debts that you will have to start paying is a recipe for trouble. You are likely accruing interest for the period that the loans are deferred and making your payoff that much larger.

DTIs are always skewed because they use gross income for simplicity. If your DTI is say 45% without the student loans... factor in payroll taxes that you have to pay and your DTI jumps to say 65%, and then you throw in student loans on top of that and cost of living (and savings) and you are over 100%. Just be careful stretching yourself so thin... everyone always thinks "i will make more money in the future".

[Anonymous]

Thanks for the reply. Personally, I don't even understand why a lender would not count it  towards you debt-to-income ratio.  Even you don't have to pay the student loan debt that year, payment will follow the next. It only  temporarily masks the debt. Although I really want  to own a home, I need to take a step back and evaluate whether or not I can actually afford one at the moment. I may opt to just have them consolidated and see what my payment will be. 

[lolabelle]

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@Anonymous wrote:

Thanks for the reply. Personally, I don't even understand why a lender would not count it  towards you debt-to-income ratio.  Even you don't have to pay the student loan debt that year, payment will follow the next. It only  temporarily masks the debt. Although I really want  to own a home, I need to take a step back and evaluate whether or not I can actually afford one at the moment. I may opt to just have them consolidated and see what my payment will be. 

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I agree.  Only you really know your financial situation, but I'd be very careful about that.  I had a reputable lender pre-approve me for a mortgage a few months ago, and when I sat down and actually did the math, I realized there was no way for me to pay the mortgage without a whole lot of stress, anxiety, and serious penny pinching.