topic Re: Going back to school, will student loans hurt? in General Credit Topics

Going back to school, will student loans hurt?

shasta — Mon, 21 May 2012 05:54:12 GMT

I was just laid off and after a year of looking with no job offers, I have to downsize. I'm moving to another state to live with a relative and have decided that going back to school is the answer. I'm in my 40's and have $20,000 in student loans from my associate degree, all being paid and in good standing. To go for my Bachelors degree, I estimate it will take another $20,000 to finish. I will be working full-time, making whatever I can (probably waiting tables).

The area that I am moving to has reasonable homes (under $100k) so I thought purchasing a property while I'm going to school would be a good idea.

Would obtaining that extra $20K in student loans hurt my score and cause me problems? I'm kind of in a hurry to buy because of my age and I've decided to make this area my permanent home. The home and property prices are rock bottom.

Myfico score is 643

Re: Going back to school, will student loans hurt?

thankfulheart — Mon, 21 May 2012 07:43:24 GMT

I think your bigger challenge will be documenting income for a home loan. Most of what I've read says 2 years of stable employment with W-2s. Student loans will play into your DTI calculations, so that's also something to consider.

Re: Going back to school, will student loans hurt?

pizzadude — Mon, 21 May 2012 19:51:48 GMT

@thankfulheart wrote:
I think your bigger challenge will be documenting income for a home loan. Most of what I've read says 2 years of stable employment with W-2s. Student loans will play into your DTI calculations, so that's also something to consider.

+1. Since you already have existing student loans, it won't help your mix of credit when new loans are added ~ it will however lower your average age of accounts ( AAoA ) when the new accout(s) start reporting.

Re: Going back to school, will student loans hurt?

Anonymous — Tue, 22 May 2012 19:07:08 GMT

It sounds like you haven't enrolled in school yet. If you're looking to buy a house soon, then the student loans won't be on your credit report until after you went through the mortgage process. One annoying aspect of student loans is that they can show up twice - first through the company that you get the student loan from, then that immediately gets transferred to the dept of education. So you get a double whammy to your AAoA. But it shouldn't impact you until you're actually taking classes.

As mentioned by another poster, the bigger issue is getting approved with no income. But if it's under $100K, that might make it easier.

Re: Going back to school, will student loans hurt?

Crazy8s — Wed, 23 May 2012 16:09:40 GMT

@thankfulheart wrote:
I think your bigger challenge will be documenting income for a home loan. Most of what I've read says 2 years of stable employment with W-2s. Student loans will play into your DTI calculations, so that's also something to consider.

I was in a similar situation with being in school, student loans and trying to buy a house. Mortgage company required documentation that student loans would be in deferment for at least 12 months post closing due to DTI.

Re: Going back to school, will student loans hurt?

thankfulheart — Wed, 23 May 2012 19:35:01 GMT

@Crazy8s wrote:
@thankfulheart wrote:
I think your bigger challenge will be documenting income for a home loan. Most of what I've read says 2 years of stable employment with W-2s. Student loans will play into your DTI calculations, so that's also something to consider.
I was in a similar situation with being in school, student loans and trying to buy a house. Mortgage company required documentation that student loans would be in deferment for at least 12 months post closing due to DTI.

This is a YMMV as my LO told me that my student loans are included in DTI regardless of deferment status.

Re: Going back to school, will student loans hurt?

Anonymous — Thu, 31 May 2012 12:07:04 GMT

@shasta wrote:

The area that I am moving to has reasonable homes (under $100k) so I thought purchasing a property while I'm going to school would be a good idea.

Wait a second...

You've been out of work for a year (I read that right, correct?) and are going to school... racking up more in student loan debt... and you want to buy a house?

So you would have your Associates debt, Bachelor's debt in a few years, and a mortgage?

And you aren't even working right now? You said "probably waiting tables" which leads me to believe that you don't right now...