Looking to buy and consolidation of student loans...

Just wondering if anyone knew if it would be harmful to consolidate my student loans into one payment with a fixed rate before we look to purchase a home? Meaning would it hurt the possibility for us to get a mortgage if I were to consolidate?

TIA

Re: Looking to buy and consolidation of student loans...

I really am not sure but if you just ask the mortgage person who you are dealing with, they will advise you one way or another.

Logically, I wouldnt think it would make a difference because its the same amount of debt and also, I would think it might even help if your monthly payments are lower because not only do they look at Debt to income ratio but they look at your current monthly payments to determine how much you can afford on a monthly basis. But of course, logic doesnt always play a role in these things so they best answer will come from a mortgage broker.

Re: Looking to buy and consolidation of student loans...

I agree that you should talk with a mortgage professional, especially if you are already preapproved. I always tell my customers not to change anything financially until they close on their house -- no job changes, no new purchases that require a loan, no major withdrawals or unusual deposits., etc

My thought is -- and this is not my area of expertise -- that consolidating your loans may bring down your FICO score a bit. I know one of the factors that comes into play is the age of your credit. So -- as a simple example - if you have had one credit card for 20 years, your credit 20 years old. If today you open up a second credit card, your credit history is considered 10 years old, because they average the age of all of the lines of credit. And the longer you've had credit, the better it is for your score.

I think if you consolidate your loans, it's considered a brand new loan (kind of like refinancing your mortgage). So it may reduce the "age" of your credit, which may lower you FICO score a bit. Not a big deal if you have a very high credit score, but if it's borderline already for you to qualify for a mortgage (say, in the low 600s), then you may not want to do it.

But a mortgage professional who knows the ins and outs of the lending criteria, but also your particular circumstances, can give the best advice! Let me know if you need a recommendation...

Re: Looking to buy and consolidation of student loans...

I would speak to a mortgage professional- I would be happy to reccommend a few that I work with- 1 in particular- she is a former underwriter and would run you situation thru underwritering- you would basically have a committment instead of a pre-approval letter