Mortgage approval and relocation loans

[Jordan 1]

Hi everyone,
Just recently graduated, matched into anesthesiology, about to start in a month. Was considering buying a home (yes I know its a depressed market), and have some credit card debt. Was considering paying the credit card debt off with a residency relocation loan so that I could maximize my chances of getting approved for a mortgage. FICO score around 760, no other debts other than Federal Stafford loans.

Question is this. The relocation loan offers a 42 month grace period during which interest accrues but no payments are due. Would this loan count against me in the "back end debt ratio" lenders use to determine how much to give you. My understanding is that they only consider debts which require a minimum monthly payment (ie. credit cards, cars loans, personal loans). Since the residency relocation loan has a 42 month grace period during which no payments are due, I figured this loan would not count against me in the ratio.

Any help would be greatly appreciated.

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[rmd722]

Jordan,

I can speak to this, as my my wife and I just relocated into our second home.

The debt from student loans are not included in the debt : earnings ratio as long as they are in forbearance or defered. The ideal time frame from application to first/next payment is twelve months.

It sounds like you are in the clear

Good luck in your new home

 

[mshheaddoc]

They are not counted depending on the LENDER's guidelines. If you go FHA or a physician loan usually student loans are NOT counted if you can prove that the loans are in deferment for at least 1 year. Many lenders are sticking to this requirement (there are a few questions about this in the finance forum). Some lenders will take a percentage of the loan (like they do with credit card balances) and then figure out a monthly payment. So ask your lender UPFRONT about this. You'll get varied answers in this lending market. If you have more mortgage questions, many have been asked in the finance forum.

Most likely you will have to also do this relocation loan at least 60-90 days out before you apply for your mortgage in order for it to make sure to wipe out your credit card debt off your credit report and be reported. Most lenders will pull your credit report within 30 days of closing to make sure no new "accounts" have popped up. Its a little secret fact that are in some lending documents. Some lenders don't pull as long as your credit report is dated within 90 days of closing, some 60 days, some 30. Ask up front because there are some SHADY lenders out there.

 

[mortgageDr]

Jordan, to let you know under (most) Physician Programs any type of student loan will not be counted against you in your debt to income ratio. And you are correct in that if you use the relocation loan to pay off your credit card debt it will increase what you can be approved for. If you would like to discuss this further please feel free to contact me and I would be more then happy to walk you through the process.

Thanks!