topic Re: Mortgage, FHA, and Student Loans in Mortgage Loans

Mortgage, FHA, and Student Loans

A1Credit — Tue, 16 Feb 2010 16:14:59 GMT

I am looking to buying a home soon and was told that student loans would not be included in the DTI if it was deferred for 12 months from the closing date. How can you provide this information?

Re: Mortgage, FHA, and Student Loans

BrianB_The_Loan_Professor — Tue, 16 Feb 2010 16:33:21 GMT

You will need a letter from the lender of the loans or evidence in your loan agreement paperwork

I would call the student loan people and just ask if they can provide you with a letter

Re: Mortgage, FHA, and Student Loans

A1Credit — Tue, 16 Feb 2010 16:53:11 GMT

Okay, thanks because I was told that as long as it report deferred on the credit report than that was all that was needed but I wasn't so sure about that information.

Re: Mortgage, FHA, and Student Loans

BrianB_The_Loan_Professor — Tue, 16 Feb 2010 17:04:06 GMT

The credit report wont say how long it is deferred so you will need to document that part

Re: Mortgage, FHA, and Student Loans

A1Credit — Tue, 16 Feb 2010 17:06:09 GMT

Okay, thanks!!!

Re: Mortgage, FHA, and Student Loans

Anonymous — Tue, 16 Feb 2010 17:09:36 GMT

One thing to make sure, is that most deferrment letters stipulate conditions of the deferral (i.e in school, etc). Alot of UWs will not accept a letter that has any conditions as proof of deferral. So if it says that the loans are deferred pending graduation under the condition that xxx or yyy then that usually wil not work. Most lenders do not provide a guaranteed letter of deferment. This is a common thing that pops up on here. Sometimes the UW lets it slide sometimes they do not.

Re: Mortgage, FHA, and Student Loans

A1Credit — Tue, 16 Feb 2010 17:25:39 GMT

I am currently in school so it is deferred until 6 months after graduation. With this being the case the lender should be able to provide a letter stating deferrement without conditions, correct?

Re: Mortgage, FHA, and Student Loans

Anonymous — Tue, 16 Feb 2010 17:31:54 GMT

No, that was my point. A deferment ALWAYS has conditions. A deferment is a conditional release of repayment of a loan for a specific reason (economic, in shool, hardship, etc), and can therefore be revoked if circumstances change. Right now, if you dropped out of school, after being out of full time enrollment for 6 months the loans would kick into repayment. This is why people have a very hard time getting student loans not counted in DTI. Most lenders use a generic form that stipulates that the deferment is conditinal upon certain factors and most UW will not accept that as proof. They may allow slightly higher DTI knowing the loans are not currently in deferment (especially if graduation is close). It all depends upon the lender and the UW. I also think in really string files the UW may be more willing to overlook this, but files more bordeline, they look at alot closer.

Re: Mortgage, FHA, and Student Loans

A1Credit — Tue, 16 Feb 2010 17:34:28 GMT

I see, thanks for the information. Hopefully, the UW will be willing to overlook this since I will not be graduating for some time.

Re: Mortgage, FHA, and Student Loans

Anonymous — Tue, 16 Feb 2010 23:38:42 GMT

It may just depend on the UW. I recently closed on a home. I deferred student loans online. I told my student loan lender I was buying a home and needed them deferred for a year. My sister actually did the same. My debt was only accessed according to my credit report. I didn't provide any documentation. It was really a non-issue.

Re: Mortgage, FHA, and Student Loans

Anonymous — Tue, 16 Feb 2010 23:42:13 GMT

As already said, it totally depends ont he underwriter, how your loan company writes up deferment letters, and the strength of your file. If DTI is not an issue, it will not matter in any case. IF DTI is tight and the file is thin, the UW is likely to look really closely. No way to tell until you app and a UW has your file in front of them.

Re: Mortgage, FHA, and Student Loans

A1Credit — Wed, 17 Feb 2010 00:43:54 GMT

Thats what I am hoping for. Thanks!

Re: Mortgage, FHA, and Student Loans

tianapb725 — Wed, 17 Feb 2010 02:07:45 GMT

I apologize for my confusion, but why would an underwrite give the applicant "points" for deferring their student loans, when they'll only have to begin payment on them anyway. I have faithfully paid my student loans on time, every month since graduation (5 years ago), but since it increases my DTI, it effects me. Do underwriters usually take the payment history into consideration?