Saturday 28 May 2016
http://naughtyamericawatch.blogspot.com/2016/05/01.html
Your debt-to-income ratio shows the lender your total financial obligations — including car payments, credit card debt and student loans — compared with your income. Lenders are looking for borrowers with a debt-to-income ratio of 36% or less, including the monthly mortgage payment. To keep yours low, pay off as much debt as possible before applying for a mortgage.
The Couches focused on paying off Sean’s truck and their credit cards, which they’d relied on when Kristin was “making less than peanuts” in her first few jobs. When they got their mortgage, their only remaining debt was from Kristin’s student loans.
3. Lower your monthly student loan payments
Even without other types of debt, having a lot of student loans could give you a high debt-to-income ratio. To lower that ratio and show your mortgage lender you have enough extra cash to make your monthly mortgage payments, consider refinancing your student loans or switching to an income-driven repayment plan to lower your monthly student loan payment.
There are tradeoffs involved with both refinancing and income-driven repayment plans. When you refinance federal student loans, they become private loans and you lose federal protections, including access to income-driven plans and federal forgiveness programs. Income-driven plans, which cap your monthly payment at a percentage of your income, increase the amount of interest you’ll pay over time because they extend your term length.
Most mortgage lenders won’t mind if your overall student loan debt will increase; they’re primarily concerned with your monthly payment, says Kevin Hanson, director of lending at Gate City Bank in Fargo, North Dakota. But you’ll save the most money on your student loans if you minimize the amount of interest you’ll pay over the life of the loan.
The Couches focused on paying off Sean’s truck and their credit cards, which they’d relied on when Kristin was “making less than peanuts” in her first few jobs. When they got their mortgage, their only remaining debt was from Kristin’s student loans.
3. Lower your monthly student loan payments
Even without other types of debt, having a lot of student loans could give you a high debt-to-income ratio. To lower that ratio and show your mortgage lender you have enough extra cash to make your monthly mortgage payments, consider refinancing your student loans or switching to an income-driven repayment plan to lower your monthly student loan payment.
There are tradeoffs involved with both refinancing and income-driven repayment plans. When you refinance federal student loans, they become private loans and you lose federal protections, including access to income-driven plans and federal forgiveness programs. Income-driven plans, which cap your monthly payment at a percentage of your income, increase the amount of interest you’ll pay over time because they extend your term length.
Most mortgage lenders won’t mind if your overall student loan debt will increase; they’re primarily concerned with your monthly payment, says Kevin Hanson, director of lending at Gate City Bank in Fargo, North Dakota. But you’ll save the most money on your student loans if you minimize the amount of interest you’ll pay over the life of the loan.
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