Hello,
We've been working with a loan officer for purchase financing. She really wants us to go FHA with 3.5% down, which is fine, but I told her upfront that I had defaulted student loans. I've been paying $200 a month on them myself for nine months now, with no formal agreement. I had lost track of these with a relocation and crazy job and irresponsibility on my part, so I started paying on them to get them out of the way. The remaining balance is around $2,000.
I checked yes in the declarations on my application regarding the federal debt question, but she insists that these are not late because I'm paying on it. I explained to her I'm paying on it, but not under a formal rehab agreement, and she should check the CAIVRS system. I also told her I could call and just pay it off, and she told me not to do that and she would send it to her processor first, who does all of the checking.
So, if her processor checks CAIVRS/my credit report/and my loan documentation, and it is in default, do I then have the opportunity to pay it off and get the systems all updated? Or should I just go ahead and spend the cash and pay it off and be done with it?
She came highly recommended and has been working in this field for 10 years, and she's been great to work with, and our interest rate would be decent, etc. I just want to make sure this is all being done correctly. She says she has never seen anyone have to pay off student loans to get approved. I figure maybe she's just been lucky and not had anyone in default in all of the loans she has been writing.
