Foreberance and Mortgage?

[Crusher]

How will not qualifying for the economic deferment and using foreberance affect my ability to get a mortgage? I would like to just pay the interest during foreberance while in residency. Will my total loan value be counted against me or just the monthly interest payments??

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[Andrew_Doan]

Originally posted by Crusher
How will not qualifying for the economic deferment and using foreberance affect my ability to get a mortgage? I would like to just pay the interest during foreberance while in residency. Will my total loan value be counted against me or just the monthly interest payments??

Your mortgage depends on your income which is used to calculate your Housing Expense-to-Income Ratio (typically 28%) and Long-Term Debt-to-Income Ratio (typically 36%). In general, your monthly mortgage payments usually cannot exceed 28% of your Income and your monthly debt obligations cannot exceed 36% of your Income.

Now, if you're in forbearance, then you can let your mortgage company know this so that they don't include any of your student loan debt in the Long-Term-Debt-to-Income Ratio. If you do this, then your mortgage amount will not be decreased. If you cannot convince the mortgage company to ignore the monthly interest payments, then your mortgage amount WILL BE decreased.

If you have a spouse who is working, then you should be okay during residency unless you buy a really expensive home.

 

[fourthyear]

You don't have to go into forbearance if you want to pay interest only. SallieMae Medloans offer several payment plans - one is called "income sensetive repayment", which lets you choose to pay from 4%-25% of your income monthly towards your loans - you choose how much you want to budget to it. Of course, interest builds this way, but if you intent to pay something to your loans during residency anyway, this is a way to do it. Also there are several graduated repayment plans, starting low and building. Check out their website www.salliemae.com to see the options they offer. Other lenders likely have the same deals.

When I went to get a mortgage, they just wanted letters from my lender saying that I could be eligible for deferrment, forbearance, etc., but they were very generic letters, not specific to my financial situation, but specific to the loan types I had out.

Don't forget, your income alone, not your spouse's income, is what counts towards deferrment eligibility. So don't worry about your spouse's income holding you back.