Find out whether school debt impacts the home mortgage loan process.
A: The amount of your school debt has little bearing in the traditional home mortgage approval process. What's more important is your timely payment and/or deferral history. Recent changes to mortgage underwriting guidelines also impute an approximate monthly payment toward school debt, even though you may have never made any payments (i.e., have never amortized any of the loans). The total amount of such ongoing payments is then combined with your proposed mortgage payment and all other debt service to ensure you meet satisfactory debt/income guidelines.
There are many additional factors to consider when purchasing a home, such as your ability to make a down payment, but do not let a considerable amount of educational debt deter you.
Send your money management questions to firstname.lastname@example.org (please include your regular postal address). Answers to our readers' questions were provided by Steven Austin, executive vice president of Commerce Bank in Tulsa, Oklahoma.