need help re:paying off loans before getting a mortgage

SummerBride06 Posted: Oct 05, 2005 05:35 PM

need help re:paying off loans before getting a mortgage

okay. so i have

**2 student loans (one is a consolidated one)
**car loan
**no credit card debt--it gets paid in full each month
**car insurance i pay off twice a year
**other random small bills such as cell phone

here's my question: my large student loan will be paid off in june before the wedding. i tripled up the payments to make it happen. i'm paying as much as i possibly can on the car loan. the other student loan is rather small so i'm not worrying about it now.

when mortgage brokers look into my payment history, they will see a lot of money going out. will this affect my chance of getting a mortgage because it increases my debt to income? or will they be happy that i'm paying things off? i'm paying a lot on the car now because i can, but will only pay the minimum after i'm married.

what should i do?? should i continue to pay as much as i can? i have a good amount in savings as well. or should i stop paying altogether so it doesn't look like i have a lot of $$$ going out

any help is appreciated!!

violet Posted: Oct 05, 2005 05:44 PM

Re: need help re:paying off loans before getting a mortgage

Does your husband have good credit? They'll be taking him into account also, so his income will be included also.

I don't think a student loan is considered bad to have. It's more of a 'good' loan, just like a mortgage. Not the same as credit card debt. I think they'll be happy that you have no credit card debt.

SummerBride06 Posted: Oct 05, 2005 05:52 PM

Re: need help re:paying off loans before getting a mortgage

we both have excellent credit. close to 800. he has no student or car loans.

MCDO15 Posted: Oct 05, 2005 06:46 PM

Re: need help re:paying off loans before getting a mortgage

Posted by SummerBride06

what should i do?? should i continue to pay as much as i can? i have a good amount in savings as well. or should i stop paying altogether so it doesn't look like i have a lot of $$$ going out

any help is appreciated!!

given your situation, you really have nothing to worry about..i wish i was in your shoes

you will get a mortage without any issues...not even a minor issue...

SummerBride06 Posted: Oct 05, 2005 10:23 PM

Re: need help re:paying off loans before getting a mortgage

Posted by MCDO15

Posted by SummerBride06

what should i do?? should i continue to pay as much as i can? i have a good amount in savings as well. or should i stop paying altogether so it doesn't look like i have a lot of $$$ going out

any help is appreciated!!

given your situation, you really have nothing to worry about..i wish i was in your shoes

you will get a mortage without any issues...not even a minor issue...

it may seem that way but my car loan is HUGE! my debt to income ratio must be very high. that will stand in the way.

you're right though that i'm in a better position than others, but i still worry after all i read. my debt to income ration must be like 70% with all i'm paying now!

MCDO15 Posted: Oct 05, 2005 10:27 PM

Re: need help re:paying off loans before getting a mortgage

we are upside down on our car, i have student loans which i even havn't thought about paying yet (keep defering) and serveral banks wanted to give us plenty of money for a house. Logically, we knew we couldn't do it.

Just make sure you are careful with the math when figure out how much you can afford.

Prehaps with some money, pay a principal payment on your car to get it down (will mostly likely alter your payment due each month (i would call the bank first))

dcwife Posted: Oct 09, 2005 04:37 PM

Re: need help re:paying off loans before getting a mortgage

Why don't you ask a mortgage broker. They would know what you need to pay off, that is what they do for a living and will look specifically at your situation. It doesn't cost anything to have them run some numbers.

jenny26 Posted: Oct 10, 2005 07:06 PM

Re: need help re:paying off loans before getting a mortgage

Student loans do not count as a 'bad debt'. As long as you pay your bills on time, you will be fine. There all different kinds of mortgages. Percentage rates vary depending on yoru credit score. You will definitely get one. Sometimes if you don't have enough credit, like no credit card bills, no history of a car loan, banks are skeptical of you. Also, keep your open credit low. It is hard to believe, but our financial advisor told us that if you don't use a credit card, close it. Open credit will lower your credit score. Go straight to a bank, don't pay a broker unless you are having problems.

DjPiLL Posted: Oct 11, 2005 12:17 PM

Re: need help re:paying off loans before getting a mortgage

Posted by SummerBride06

it may seem that way but my car loan is HUGE! my debt to income ratio must be very high. that will stand in the way.

you're right though that i'm in a better position than others, but i still worry after all i read. my debt to income ration must be like 70% with all i'm paying now!

I don't know if this will make you feel better. But I got approved at 51% debt/income ratio with me and my wife having an average credit score of 805.

We own two cars (one has a 26k loan... the other is a 25k loan - 51k car loan total). Is that as huge as your car loan? Banks will expect people to have car loans because cars are the way to people's lives. Same goes for stuff like auto insurance, utilities, and stuff like that. Auto insurance doesn't even count towards your DTI.

If you have good credit and good income... the banks will have no problem giving you money.

Student loans are not considered 'bad debt'. Hell you can even deduct your student loan interest off your taxes. Just stay away from credit card debt and you will be fine.

diluvchu Posted: Oct 11, 2005 10:53 PM

Re: need help re:paying off loans before getting a mortgage

Just to let you know, student loans can become 'bad debt' if you are delinquent for more than 3 months. After that it will appear on your credit report and will have adverse effects on your credit, so don't think you don't have to pay it or pay it on time.

Also, you should try to keep your credit card balances at less than half of the credit limit, this actually will make a difference on your credit score.

Hope this helps!