Can anyone with mortgage experience weigh in on this for me? My SO and I are considering purchasing a home in the spring. We're hoping to go FHA and we're cleaning-up a few derogs on our reports. However, we were debating last night about a Debt/income ratio situation. Here it is: We both work full-time, and just recently went back to school. My SO's Student Loans are now deferred (she was paying on them and current) because she is in school. It reports that they are deferred until 2011. Mine will be defered in Jan (I am also current and have been paying on them). Will these defered Student Loans be factored into the Debt/Income ratio when we go for an FHA mortgage in the Spring? She says yes and I say no. Does anyone know how these defered SLs would factor into the equation?
I believe they would be factored in. Whether or not you have to pay them right now, you do still have to pay them, presumably sometime within the next 30 years during which time you will also be paying this mortgage. Also, my SL tradeline on EQ was incorrectly reporting the account as deferred. When they removed and corrected the deferred status, my score jumped although I don't recall how much since it was back towards the beginning of this year. L
hmmmm. What you're saying is true, however, my student loan payments (for example) get larger as time goes on (i.e., they start at one level then go to another level in a few years then finally to another level a few years later). At what level would they be factored into the debt/income ratio? Same thing with credit, they look at a snapshot of your current credit, not what it will be in 5 years. I'm just assuming they do the same thing with the debt/income ratio. They look at a snapshot of your *current* debt/income ration. whyspers said, "Also, my SL tradeline on EQ was incorrectly reporting the account as deferred. When they removed and corrected the deferred status, my score jumped although I don't recall how much since it was back towards the beginning of this year." When my SOs went into deferment, the scores didn't change at all. Might be something else?
We bought our house last year and I was in the same situation...the lender did not factor these into our debt to income ratio and I just needed to write a formal letter to the lender telling them how much longer I could put my student loans into forbearance (deferment + interest). They put it in our file and we signed away!
Same situation about a year and a half ago, but with conventional financing - my lender (BofA) did not count them in debt ratios. Had to be deferred for min 4 years - Sallie Mae provided documentation for this after a quick phone call. You might look into whether you have other options than FHA. BofA has a Neighborhood Advantage program (you can get info off their website) that I've been really happy with. Rate I got was lower than what was available with FHA. And I always tell peopl to check with the state/county/city Departments of Housing for first time buyer programs. Some are really excellent. Good luck.
My underwriter colleague tells me they have to be deferred for a minimum of three years for them not to be counted against you.
do you mean defered for 3 or 4 years prior to going for the mortgage (i.e., they've actually been in deferment for three years), or they have to be able to be defered for 3 or 4 years? (i know that sounds confusing, i hope you understand what I mean).
They have to be deferred for three years from now. I don't know when to count from -- could be from the date it is underwritten, could be from the date of the note on the mortgage, could be from the date you apply.
Both of you are correct. It really depends on the lender. I had to beg and plead with a bank when I went for my mortgage to NOT count them. Mine are deferred until 2005. I eventually went with a lender that did not factor them in. Additionally, when I went for my FHA loan in 97, they did NOT factor them in. What gets my gaul about that is that they don't factor in your potential income in 4 years so how is it fair for a bill due in the future to affect your income today? It incessed me so much that they even thought about adding it in that I dropped that lender.
When I bought my home in 96 and had student loans deferred for 6 months they DID NOT factor them in because they were not due at the time of application...you can always get a financial hardship deferrement after the time frame is over so how could they say you will have to pay them..you can deferr them while is school too and they won't be due. They just looked at our credit report and looked at what we owed to each creditor (when your loans are deferred it will say deferred). Since we weren't paying to Sallie Mae at the time they didn't factor it in.
