Student loan not in name

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  • #61825
    OliveJames
    Member

    I just signed myself up for my first seminar and I am trying to gather as much information prior. My parents took out a parent plus student loan out for me for college, however, I have been the one making the payments for the past 5-6 years. The loan is not in my name. Does anyone know how this will affect the process, if at all? With all my current debts, including this parent plus loan, my DTI is 14%.

    Another question I have is if I am currently saving for my anticipated MRF can I still go through the intake process and get everything else settled?

    #61828
    Nelsont
    Member

    So the debt more than likely will not be yours unless it shows up on your credit report or you are somehow tied to it. Your payments on the loan however will either need to stop or be explained. This is definitely providing a hindrence to your maxium payment abount though. Since 9% DTI is the maximum advisable DTI then if this student loan is included in your DTI then your maximum approved monthly payment will decrease to 26% DTI.

    Absolutely. The best thing you can do is start the process early. If you aren’t ready then you will be advised on how to become ready.

    #61831
    OliveJames
    Member

    Should the 9% you’re referencing include my current rent? The DTI I calculated is including my current rent, student loans(mine + parent), car payment.

    The loan does not show up on my credit report but I cannot stop payments as it is something that has been agreed upon with my parents. Hopefully providing an explanation will suffice.

    Thank you for your information

    #61833
    Nelsont
    Member

    9% does not include your rent.

    The rule is 40% max includes all monthly obligations. In that 40% not more than 31% can be rent and not more than 9% can be other debt such as student loans. Minimum payment due on your credit cards is also factored in. If your monthly “loan” debt is more than 9% than the 31% you can be approved for will be decreased by that amount unless or until you lower your total monthly payments on that debt. Make sense?

    If 9% includes your rent though then your income must be extremely high relative to your housing expenses. As an example if your monthly income is $4000 then your rent + student loans + car payment combined = $360. Does that sound right to you?

    #61836
    OliveJames
    Member

    Thank you for that break down, very helpful information. My DTI for my car loan $500, student loan $496 is 6%, no current credit card debt.

    We would want our house payment to be no more than 3,000 which brings our total DTI below the max 40% thankfully as we have very high child care costs and trying to play catch up with retirement.

    #61841
    Nelsont
    Member

    If you use a credit card then you have credit card debt in the eyes of the bank. The only way to have this not considered is to pay it off completely every month prior to a statement generation (make payments immediately after purchases) and have a zero balance on your statement. If you wait until you get your statement before paying your credit card even if you pay in full then that will be factored into your debt. Only the minimum amount due though.

    Good luck with everything!

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