topic Re: Will a high student loan balance factor into getting approved for a mortgage? in Mortgage Loans

Will a high student loan balance factor into getting approved for a mortgage?

danny4l — Tue, 05 Mar 2013 01:05:31 GMT

Right now I have weak credit but I am working to have excellent credit by 2017 when all my derogatories come off my report. At that time I will still have over $115000 in student loan debt and I won't be making that much money per year. If I want to buy a house at this time, how will they look at the outstanding student debt? Will they discriminate based on the high balance or will they approve solely based on the credit score?

I understand that you shouldn't have a lot of unsecured debt and I was told that with installment loans, it doesn't matter how much the balance is as long as it is paid as agreed.

Thanks

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Tue, 05 Mar 2013 01:32:02 GMT

Total balance has nothing to do with it.

Your monthly payment will have something to do with it.

All your monthly payments will be included in your DTI, which will impact how much you qualify for purchase price.

Re: Will a high student loan balance factor into getting approved for a mortgage?

danny4l — Tue, 05 Mar 2013 03:46:48 GMT

Do you recommend anything to help lower the monthly payment?

In other words, should I negotiate anything with the creditors or refinance the loan so that my monthly payment is the lowest possible?

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Tue, 05 Mar 2013 08:00:27 GMT

You can consolidate your school loans if it makes the payment lower.

but it depends on what other debt you have and how much you make.

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Tue, 05 Mar 2013 12:54:32 GMT

I have close to the same amount of debt- more like 100k for me. I pay about $800 a month and have 4 separate loans. I have excellent credit since I have 4 student loans, 1 credit card, and 1 car loan. However, I cannot afford a home on my own ( need my husbands income) since my debt to income ratio is crazy due to my student loans. I also make decent money but it still doesnt matter due to my high student loan payments. If you have all federal loans you may be able to consolidate. If you have private loans- you dont have as many options. I was unable to consolidate since I have a mixture.

Whether or not you can buy a home will depend on the area you are in as well. In my area, I still qualify for a home around 150k but unfortunately there are no homes in my area for that amount.

Alos, lowering your payments can hurt you in the long run- since less of the money you are paying will go toward the principal and you may basically just be paying the interest on the loans. This will depend on the interest rate that your loans have.

You should be able to create an online account with each of your loan companies and you should be able to see the amount that you will have to pay monthly. If you're not sure who your loans are with- the first place to start would be your credit report. Otherwise, you will start getting bills in the mail when the due dates are approaching.

Re: Will a high student loan balance factor into getting approved for a mortgage?

danny4l — Tue, 05 Mar 2013 14:56:23 GMT

Just out of curiousity, how much do I need to make if I have $115000 in student loans and no other debt?

Can you give me rough number and then an ideal number.

Thanks

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Tue, 05 Mar 2013 16:06:49 GMT

Have you considered doing the income based repayment plans? As long as your payment is more than 0, then you will be good for a mortgage. The use whatever payment is listed on your credit report for dti.

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Tue, 05 Mar 2013 17:22:03 GMT

I woudl be wary of the income-based plan, just because it isn't actually structured for you to pay OFF the loan. It just lets you pay what it calculates you can afford -- which may be LESS than even the interest payments. So 5 years of paying under the IBR plan, and you may end up owing more than when you started! [I was on IBR for a little bit, and realized that it was costing me more than it was helping me!]

What I have done, and what seemed like made the most sense, is to consolidate my loans (I had all gov't loans). Because my balance is high, under the standard payment plan you automatically get your payments extended to 30 years. I DO NOT RECOMMEND paying the amount that it tells you to pay over 30 years, because that will result in you paying probably over $200,000 to cover your $110,000 loans. I WOULD RECOMMEND continuing to pay at the 10 year pace if you can, so that you are making good progress to paying off yoru loan, but once you get a mortgage payment, you can reduce your payment to only the required amount if necessary. When you apply for the mortgage, only the REQUIRED loan payment will be factored in, and you can still pay more if you are able.

I am not sure how much your required monthly payment will be, but your loan amount is between mine & my husband, so your monthly required payment on the 30 year plan should be between $500 and $1100. I would say estimate your required payment at about $750/mo and do your DTI from there.

Re: Will a high student loan balance factor into getting approved for a mortgage?

jadeite788 — Tue, 05 Mar 2013 17:25:11 GMT

Advice get on Income Based Repayment plan. Just got my letter today. All I pay is $45.00/monthly

Re: Will a high student loan balance factor into getting approved for a mortgage?

jadeite788 — Tue, 05 Mar 2013 17:26:22 GMT

@danny4l wrote:
Do you recommend anything to help lower the monthly payment?

In other words, should I negotiate anything with the creditors or refinance the loan so that my monthly payment is the lowest possible?

Income-Based Repayment plan. Mine are about $85K with interest, my monthly was $655, got on IBR and now I only pay $45 a month.

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Tue, 05 Mar 2013 17:36:35 GMT

Jadeite,

have you tried to get a mortgage on the ibr?

Re: Will a high student loan balance factor into getting approved for a mortgage?

jadeite788 — Tue, 05 Mar 2013 18:06:12 GMT

I am doing that right now, this is my first time. I just turned in my IBR letter today and I am waiting on my preapproval letter. That is all my LO requested so I would not have any problems with the UW. So even if they pull my credit scores again it will have my IBR payment because I went from deferred to IBR on the public service loan forgiveness program.

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Tue, 05 Mar 2013 18:25:03 GMT

Can you keep me posted?

We pay 0 right now in ibr and its causing some major problems! But,next year we'll pay $15 a month so I am anxious to hear what happens for you! Good luck!

Re: Will a high student loan balance factor into getting approved for a mortgage?

jadeite788 — Wed, 06 Mar 2013 16:03:37 GMT

wow how did you manage that one? What type of problems?

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Wed, 06 Mar 2013 18:00:32 GMT

Well, we make 58k a year, and have 5 kids! That puts us at 0 payment. We actually are stopping all payments into my husbands 401k so that it raises our agi so we can have a $10-$15 ibr payment.

Problems....the uw wants to run our dti as a standard student loan payment instead of the 0. They treat a zero ibr payment as a deferral. So, we couldn't get approved with dti that high. We have to wait a year for next years taxes to give us a new ibr payment that isn't zero. It sucks.

Re: Will a high student loan balance factor into getting approved for a mortgage?

jadeite788 — Wed, 06 Mar 2013 19:35:50 GMT

i kind of see why the UW thought it would be considered deferred, are you or your husband on the PELF.

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Wed, 06 Mar 2013 19:41:43 GMT

Pelf? I'm guessing not...

Re: Will a high student loan balance factor into getting approved for a mortgage?

danny4l — Fri, 08 Mar 2013 19:58:37 GMT

So basically what you are saying is that a high student loan balance can be dealt with when it comes to getting approved for a mortgage and that I don't have to necessarily worry that the $115000 balance will prevent me from eventually buying a home.

Thanks

Re: Will a high student loan balance factor into getting approved for a mortgage?

Anonymous — Fri, 08 Mar 2013 20:10:59 GMT

The balance is not what the Lender looks at. They look at the monthly payment which would be included in your DTI.

Re: Will a high student loan balance factor into getting approved for a mortgage?

jadeite788 — Fri, 08 Mar 2013 20:14:17 GMT

Well I just got pre-approved today under the IBR plan. About freakin time. @Danny it is not the balance it what you pay monthly that is calculated in your DTI.