How Student Loans Affect your Mortgage

Did you know that if your student loans are in deferment or forbearance that there is an impact on your refinance? If the loan is deferred 12 months after your loan closing date or says $0 per/month on your credit report then you are fine. But if it does not show anything at all then you may still need to account for at least 0.5% of the balance owed divide by 12 to be included in your debt and income ratio. Your debt and income may be higher than you think. For example, if you owe $35,000 and you are looking to refinance. Then, it would be $35,000 x 0.5%= $175 per/month. That means if you pre-tax income is $7,500 and your other expenses including your mortgage may be higher than it should be. Usually, conventional loans will cap the total debts at no more than 43% of your pretax income which including the mortgage, then all your other expenses can only go up to $3,225 per/month.

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How do Renovation Loans work?

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