PSLF + COVID + Mortgage = Chess

[RootDet]

Hi all,

I started to officially enter into repayment last april, so I am 1/10 years into PSLF. I made payments towards SL's while in school but those don't count I guess.  In any event, I have about 12 student loans open and reporting on the credit report.  As we all know, even though payments are suspended (still paying 80% of my monthly amount currently), the last year has counted towards PSLF. 

I want to get a mortgage in the next 12-18 months. But I am feeling like I have this balancing act going on. Right now the current terms of the SL's are desirable (0%, yadda yadda).  I know the feds keep talking about there being a student loan forgiveness, and they teed up the ball for that to happen.  As I look over my mortgage scores, they are high up enough for the best rates, but I always get dinged for "too many accounts with balances".

Well, I have student loans, 1 car, and 3 CC's with a balance.  Does not take a PHD to figure out Fico counts student loan balances in that message.  I could consolidate the loans and get it down to 2, which would rectify that score issue after the new account ages off (since it will have a brand spanking new account open date).

Now so far, I have not told the Govt that I have any real elgibility towards PSLF, other than my interest when I do the repayment calculations.  Technically, I do not have to fill out the PSLF forms until I am 100% qualified, or I could choose to do an annual certification and keep the paperwork to a min. BUT if I turn in the PSLF, it will trigger all my accounts at Navient to close and new ones to open at Fedloan, which I am sure will have some impact on the credit score and I bet in the end, I get the losing end of it.  

On the flip side, I am also not wanting to rock the boat much because any forgiveness they give may be excluded if I start doing crazy things like moving loans around. However, I am not banking on this. 

I guess I am wondering what everything thinks I should do. Consolidate, PSLF forms, do nothing, etc

Looking for opinions from those that also are playing the chess game. 

[House2021]

I'm curious too, thought I'd give this a bump. I have been working a PSLF job for five years but was unaware I had to start the paperwork before reaching year 10

[RootDet]

You don;t have to do it early, but you CAN. Some choose to do it yearly. Doing it that way helps minimize surprises in the end. 

[ccquest]

Negative account codes don't necessarily impact eligibility for other credit. If your profile is otherwise eligible for a mortgage, owing $50k on 15 students or 1 student loan won't be the deal breaker.

As far as how the new loans might be treated by FedLoan, there's a chance they'd be backdated anyway since it's still technically the same loan, just a different servicer.

[calyx]

Well, I have student loans, 1 car, and 3 CC's with a balance.  Does not take a PHD to figure out Fico counts student loan balances in that message.  I could consolidate the loans and get it down to 2, which would rectify that score issue after the new account ages off (since it will have a brand spanking new account open date).

Question:  When you say 3 credit cards with a balance - are you saying you have a total of three credit cards and all of them have a balance or just one?   To maximize points for mortgage scoring, you should only have a balance reporting (under 9%) on a single card.    Mortgage scores are super sensitive to the numbers and amounts of revolving lines reporting - NOT so much the installment loans (in fact, installment loans are the least impactful thing, so I wouldn't stress it)

I guess I am wondering what everything thinks I should do. Consolidate, PSLF forms, do nothing, etc

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If not practicing AZEO, get there.  I would not bother with consolidating.   Even though you are looking long term (12-18 months), the longer since your most recent account opening the better.   Consolidation WILL start a new tradeline, it does not backdate.

I wouldn't sweat the student loans too much with the mortgage hunt.      That'll be the easiest thing to deal with, to be honest.   Any underwriter won't blink much at it (unless it was defaulted or had other dings).    Your DTI, mortgage scores will be more important - watch those credit cards and just practice AZEO once you get closer to applying.

Oh, and PSLF paperwork - if you had to transfer everything to FedLoan (without consolidating), then yeah, the tradelines will just remain with their original opening date and you'd be fine.   That one is up to you.