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ChristinaM128
LIF Adult
Member since 8/12 4043 total posts
Name:
Christina
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Student loans and mortgage
We are going through a mortgage pre approval process with a bank and were blown away that they figure a 3% monthly payback on student loans regardless of what your actual payments are. DH has $120K in student loan debt, and they are figuring in $3600/month loan payments when in reality, it's around $400. They will not budge from this paradigm.
Has anyone heard of this before? Anyone know of any banks or credit unions who do things differently with a substantial amt of student loans?
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Posted 4/9/14 8:46 PM  |
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Prudential Douglas Elliman Real Estate
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Student loans and mortgage
Posted by ChristinaM128
We are going through a mortgage pre approval process with a bank and were blown away that they figure a 3% monthly payback on student loans regardless of what your actual payments are. DH has $120K in student loan debt, and they are figuring in $3600/month loan payments when in reality, it's around $400. They will not budge from this paradigm.
Has anyone heard of this before? Anyone know of any banks or credit unions who do things differently with a substantial amt of student loans?
Paying $400 a month would take 25 years to pay it off, and that is assuming you have a zero percent loan which you don't. Is $400 an interest only payment? Only counting $400 a month is just not realistic when counting DTI ratios.
Unfortunately when figuring out affordability for a house, debt is debt and there really isn't any "good debt vs. bad debt".
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| Posted 4/9/14 9:19 PM |
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DWKS810
LIF Adolescent
Member since 3/09 554 total posts
Name:
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Re: Student loans and mortgage
We are in the same boat and have had a really positive experience with U.S Mortgage Co., I sent you FM. They have not had an issue thus far with regard to our reduced monthly payments.
The whole scheme of loans is different now with the loan forgiveness offered at the end of the payment period through IBR, etc. so it's not necessarily true that you will ever need to pay them off.
ETA that we are in the same boat regarding the substantial student loans - our bank is not taking the position yours is regarding how they calculate the monthly debt. They are taking into account our actual monthly obligation.
Message edited 4/10/2014 12:47:59 AM.
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| Posted 4/9/14 10:23 PM |
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DRMom
Two in Blue
Member since 5/05 20223 total posts
Name:
Melissa
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Re: Student loans and mortgage
My husband is a broker and said that is not standard.. You can call him if you like pm me for his info
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| Posted 4/10/14 12:10 AM |
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MrsB126
LIF Infant
Member since 2/14 51 total posts
Name:
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Student loans and mortgage
We make combined 100k+ a year. We have 105k in student loans combined no credit card debt and two new cars each with $300 a month and are half way paid off. We both have credit scores about 750. We cannot get a mortgage because of student loan debt. After our bills each month we have 4100 in disposable income and cannot get approved. We are trying to just pay down and thinking of emptying our savings which by the way we have aside for a house/ closing around 90k and they won't work with us. It's ridiculous. We may have to just empty our savings so we can get a house :(
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| Posted 4/10/14 8:53 AM |
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NYCGirl80
I love my kiddies!
Member since 5/11 10413 total posts
Name:
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Re: Student loans and mortgage
Posted by MrsB126
We make combined 100k+ a year. We have 105k in student loans combined no credit card debt and two new cars each with $300 a month and are half way paid off. We both have credit scores about 750. We cannot get a mortgage because of student loan debt. After our bills each month we have 4100 in disposable income and cannot get approved. We are trying to just pay down and thinking of emptying our savings which by the way we have aside for a house/ closing around 90k and they won't work with us. It's ridiculous. We may have to just empty our savings so we can get a house :(
I'm sorry you're facing this. I just wanted to say that emptying your savings will not help you get a mortgage because it's really important that you have a certain amount in savings. Have you met with a broker who can help you figure out how to get to a place where you can get approved for a mortgage?
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| Posted 4/10/14 9:02 AM |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: Student loans and mortgage
Are your student loans in deferment?
How much are you looking to borrow?
Typical debt to income ratios are 28% gross income to mortgage (including taxes and insurance) and 36% for all debt.
Some banks will go higher than 36%, but with increases in property taxes and utilities, I wouldn't go much higher
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| Posted 4/10/14 9:11 AM |
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Student loans and mortgage
I would recommend Continental Home Loans - they did a great job for us.
I would put that $4100 disposable income to your student loans now.
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| Posted 4/10/14 9:38 AM |
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Cheeks24
Living a dream
Member since 1/08 8589 total posts
Name:
Cheeks
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Re: Student loans and mortgage
Posted by MrsB126
We make combined 100k+ a year. We have 105k in student loans combined no credit card debt and two new cars each with $300 a month and are half way paid off. We both have credit scores about 750. We cannot get a mortgage because of student loan debt. After our bills each month we have 4100 in disposable income and cannot get approved. We are trying to just pay down and thinking of emptying our savings which by the way we have aside for a house/ closing around 90k and they won't work with us. It's ridiculous. We may have to just empty our savings so we can get a house :(
I would be taking that extra money and paying off your cars and student loan debt. That's a big chunk each month you can start to knock down.
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| Posted 4/10/14 9:52 AM |
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MrsB126
LIF Infant
Member since 2/14 51 total posts
Name:
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Student loans and mortgage
Student loans have been in repayment for the past 4 years. We have been paying them on time each month. It looks like that's what we will have to start doing. I hope when we have children we can pay for their college. My parents helped me out significantly. Most of the debt is from SO and he hates we have this much debt in student loans!
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| Posted 4/10/14 11:07 AM |
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Re: Student loans and mortgage
It's definitely not standard for a lender to look at a percentage of total student loan debt when calculating debt-to-income. Most banks will look at the actual payment. But if there is no documentation of actual monthly payment, the bank can revert to using a % (or just denying the loan!).
But every lender has different policies and even with the same lender, especially large ones, different underwriters can demand different things or apply more stringent criteria.
It's not really one-size-fits-all. That said, I have had clients with debt-to-income in the high 40s get approved for loans. Not saying that is particularly wise for the borrower, but just saying it's sometimes possible.
Glad to hear positive reviews for U.S. Mortgage Corp. I refer a lot of business to Steve Simpson in the Levittown office, and I feel that the customer service and speed of doing loans is second to none within U.S. Mortgage. They really work with their clients to get things done.
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| Posted 4/10/14 12:19 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Student loans and mortgage
I love continental and I am using them myself -
I did have to pay off my car to get my mortgage - my car payment was $925 a month so it made a huge impact even thou I have no other debt
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| Posted 4/10/14 4:20 PM |
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jessnbrian
Only God knows His plan for us
Member since 4/13 7238 total posts
Name:
Jessica
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Student loans and mortgage
Definitely take that $4100 disposable income and pay off your student loans. I recently just tripled my monthly payments, and I'll have my loans paid off in 18 months. Granted, I only have a totally of about $20K left (I had won a lot of money years ago and paid off about $25K in one bulk some), but still. For us, it means my salary currently goes to my student loans, monthly utilities, and groceries (when I can), and DH pays the mortgage bill monthly. It makes a big difference for us because that means that I will be debt free shortly, right in time for when our kids arrive, this way if I decide to be a SAHM, DH doesn't have to pay for my student loans.
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| Posted 4/10/14 4:37 PM |
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jessnbrian
Only God knows His plan for us
Member since 4/13 7238 total posts
Name:
Jessica
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Student loans and mortgage
Just a side note, there were a lot of lenders that wanted letters from each and every single person who gave a gift at our wedding because there was a bulk some deposited that we were using - forget about the fact that we paid for the wedding ourselves (more than what was deposited in the bank). We actually ended up with about $5K in other monetary gifts from when we got the approval and went to contract to the day of our closing that we didn't deposit because it would require further documentation. We just deposited it all on the day of our closing.
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| Posted 4/10/14 4:39 PM |
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