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STUDENT LOANS AND DTI
My application is currently in underwriting. I am concerned that because my student loans are so high that my DTI may not pass. I have found a home that is scheduled to close on 12/2. Honestly I did not see you site until after applying thru my current lender. Would you be able to take over the case and will I still be able to close on 12/2 or earlier? I am in Illinois and also seeking downpayment assistance from IDHA. The Home Inspection and Appraisal have all been completed. My student loans total 186k and I am currently in deferment, but the lender is saying that the payments are coming up to 1300 per month…but I am paying $0.00. My credit score middle is 643. Also I am currently employed but will start a new job in a week making more money. Can you help? What steps will I need to take.
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1 Reply
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I realize your worries about the underwriting phase and how things are financially, particularly concerning your student loans and the imminent job shift. This is how you can work out your situation:
Clarify DTI Calculation: Reduced monthly payments are frequently considered for student loans in default because most lenders use the most generalized percentages of the total amount due when determining the debt-to-total income ratio (DTI). You may want to know why the $1,300 monthly payment was suggested.
Provide Documentation: Submit the documents showing that your loans are in deferment, as this could assist in demonstrating that the payments are not currently impacting your budget.
Tackling the Student Loan Payments:
Consider Income-Based Repayment: You can apply to switch to income-based repayment plans that may significantly lower your monthly payments based on your new income level as soon as you are off your deferment.
New Job Considerations:
Document Job Change: You should supply your lender with supporting documents for your new position, such as your salary and start date. Lenders normally want to see at least one paycheck stub from the new job. However, they are willing to verify verbally with the employer instead of providing a paycheck stub.
Down Payment Assistance:
Check IDHA Requirements: Ensure you are eligible for the Illinois Down Payment Assistance program and Appraise your lender accordingly. It may also help to get pre-approved for the assistance.
Timing and Closing:
Request a Transfer:
- If you decide to switch lenders, consider contacting the new lender as soon as possible to take over the loan application process.
- Make sure they can accommodate your closing date of 12/2.
- Remember that changing the lender within the process may take additional time​ ​for their processing.
Monitor Progress: Maintain contact with whichever lender you finally settle with to avoid setbacks in documentation processing.
Please Consider that you can Turn to a Mortgage Broker’s Services:
In this regard, a mortgage broker could help locate lenders who would agree to more preferable conditions than the existing ones, considering your conditions.
Although closing on your new home can still be completed on or before December 2, steps must be taken immediately. Ensure you provide your current or potential lender and any other information regarding other obligations, such as student loan issues and new employment status. You may need further help, so don’t hesitate to seek the help of a professional mortgage expert who can take you through this process efficiently.
If you have any other questions or need further clarification regarding certain aspects, do not hesitate to ask them.
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