Ask The Loan Officer - Page 10 - Tilted Forum Project Discussion Community

Cynthetiq · 01-13-2009, 11:18 AM

I'm not sure, but at the point that he is in the student loans are just debt load. There isn't any history of payments.

As far as utilities, that is a slightly different story, but I'll let NoSoup weigh in for that.

Just because you have a credit card doesn't mean you'll sink into the 20% interest trap. Again, you have to be disciplined to use the card and pay it off. It is that simple. Some utilities take credit cards. Pay your utilities with the credit card, then pay off your credit card with the same funds you'd be paying with a check. The only difference there is you're "building" credit.

Credit cards aren't the only way, it's one of the simplest. You could get any dept store credit card, or small loan (still credit based) to make a purchase for a computer, car, other large durable good. The idea here is to show that you are trust worthy to pay it back.

Understand that last few words in that line. Pay it back. See that's the problem with those with the 20% interest trap, they didn't pay it back. They continued to accumulate more debt. And still didn't pay it back.

It is a simple recipe.

Pay for all the goods you're NORMALLY going to pay cash for with a credit card.
Put that CASH someplace safe and don't spend it.
Use that CASH to pay off your credit card at the end of the month.

NoSoup · 01-13-2009, 08:27 PM

Quote:

Originally Posted by TheNasty

This was linked http://www.tfproject.org/tfp/tilted-...l-finance.html

So, lets start off with a question!

I'll be graduating in May with a Masters degree, I'll have $49,000.00 in student loan debt.
($39,000.00 in Stafford at 6.8%) and ($10,000.00 Perkins at 5%).

I will have a 6 month deferment period starting in May.

In August I will hopefully find employment, with a salary of between $38,000.00 and $45,000.00. For purposes of this discussion lets assume the lower figure.

I have no credit card debt, and no credit cards. No cell phone, and I own my car. Insurance is $300/3 months.

Now to the question:

What determines if I qualify for a home loan? With the figures provided how much would I be approved for? Using conventional wisdom how much could I safely afford for a house?

In previous threads you've mentioned that generally lenders look at your debt to income ratio to determine eligibility, but that post was made in 2003. With the current lending climate, have things changed? What am I looking at?

Thx!

A variety of factors will determine if you qualify for a home loan, but primarily it's going to boil down to Credit History (including credit score), Loan to Value Ratio (How much of a Down Payment you are putting down) and Debt to Income Ratio (Amount you Earn vs. Debt Obligations on a monthly basis)

As far as how much you should spend safely on a house, it really boils down to your lifestyle. The current fad is that your PITI (Principle, Interest, Taxes and Insurance) coupled with your other monthly credit obligations is no more than 50% of your total monthly income. However, I would add that to do it safely you should not only utilize that formula, but spend no more than a total of 1/3 of your income on housing.

It will depend on your actual repayment terms of your educational loans, but roughly I'm coming up with a net income of approximately $2215ish per month (after taxes and insurance) In your situation, I would have my mortgage payment (PITI) be equal or less than $730 a month or so. Note: You likely will qualify more, and depending on where you live that might not come anywhere near what would be required to buy a liveable house, but going over that may make it difficult over the long term.

One thing people often forget is that it's a 30 YEAR commitment (or whatever, depending on your loan term) and that you have to plan for every eventuality. $730 a month might seem like a breeze now, but how does the next 30 years look? There are a huge number of factors that you need to potentially plan for - going back to school, losing your job, a wife, kids, what have you. A lot can change in that length of time, and you want a reasonable shot of remaining comfortable until it's paid off. It's much better to go a bit smaller than you think you'd be comfortable with and be able to pay it down faster than the alternative.

Quote:

Originally Posted by TheNasty

Are Credit Cards the only reliable way of building credit?

I've seen what Credit Card troubles do to people, family and friends are still living with them and dealing with the 20%+ interest. If at all possible I'd like to continue living cash only.

I've been in this apartment here for 6 years, have never missed any utility payments etc. Has the credit report market changed at all to where that is reported at all?

No, credit cards are only one reliable way to build credit. Now remember, this is based on your short post, but you seem relatively conservative when it comes to finances. Perhaps you'd be more comfortable taking out a secured loan for $500 or something. Yes, you will be paying interest, but consider it an investment - very few things in life will net you over your lifetime as much savings as having a good credit score.

You can read more at
NoSoup's Guide to Obtaining and Maintaining Excellent Credit

As far as utilities are concerned, they are not reported to the Bureaus. Nor are cell phones, Netflix, or anything else that you don't have to fill out a credit application for. Length of employment is, but only has a significant impact if you are employed at the same place for greater than 5 years.

Quote:

Originally Posted by Baraka_Guru

Don't forget you can (usually) get a free credit report if you snail-mail in a request to a credit bureau. I think you build credit with student loans, utilities, etc. Best get a report to see what's going on and then go from there.

Indeed - but now it's even easier. You can obtain free credit reports (One from each Credit Reporting Agency per year) at www.annualcreditreport.com

It's nice to see this thread getting a bit of interest nowadays - if any of you folks have any more questions, please let me know!

Thanks

TheNasty · 01-13-2009, 09:11 PM

Nosoup:

Thank you for your reply, and thanks for this thread!

You brought up a very good point about attempting to consider 30 years into the future, thank you for that. There is so much to consider that I really have to try and plan for the future.

Sue · 02-22-2009, 05:05 PM

I've already gotten my federal student loans for 08-09 and 09-10.

I'm definitely going to be needing a private loan to make up for my cost of living expenses, which will be about $20,100 per year (including my rent).

My question is: In getting a student loan, should I include the tuition for my school, or should I hope that each year the federal student loan will cover me? I'm going to a small, private institution for my BSN. Three years, $72k total (I know it's a lot, but this was my decision).

Thanks

NoSoup · 02-23-2009, 03:22 PM

Nope- you haven't any guaranteed funding, so you can't include it.

However, when you apply, I would point out that you will likely get the funds.

If you chose not to, though - there is a term for that. Fraud

Sue · 02-23-2009, 05:55 PM

Quote:

Originally Posted by NoSoup

Nope- you haven't any guaranteed funding, so you can't include it.

However, when you apply, I would point out that you will likely get the funds.

If you chose not to, though - there is a term for that. Fraud

so, I have a couple more questions.

1) Do I get one loan for all three years, or one loan EACH year?

2) Based on the amounts I mentioned in my first post, what (in your opinion) should be a max amount I should apply for? How much more over my cost of living annually?

snowy · 02-23-2009, 06:06 PM

Sue, your school should have Cost of Attendance estimates for you--either you will have to ask the financial aid office for these or they will be somewhere on the website. Cost of attendance figures add up tuition, fees, books, and living expenses (including rent, food, transportation costs, and discretionary spending). Federal loans have annual limits; you will have to see what that is relative to the cost of attendance. This website has a table of loan limits: FinAid | Loans | Student Loans

What you will likely have to do is apply for a private loan to make up the difference. Estimated cost of attendance is fairly generous (in my mind, may not be to you); I advise that you come up with an alternative budget and only borrow what you need to privately. Private loan companies are not so generous or flexible with their repayment terms.

Regardless, both the feds and the private loan company will check with your school's financial aid office to find out what the cost of attendance is, and they will not loan you money above and beyond that cost. A private loan company will only loan you enough to make up the difference between your federal loans and the cost of attendance estimate. If your living expenses are higher than that, you're going to have to find some other source of money.

And with the feds, you'll have 2 loans a year--your unsubsidized loan and your subsidized loan. It will most likely be disbursed at the beginning of your academic term. With private loans, try to keep it to one loan a year. It will most likely be disbursed at the same time as your federal loans.

I may not be a loan officer, but I have been jumping through the financial aid hoops for a while now

invalidiuser · 03-02-2009, 11:24 AM

Hello, I got a question. My wife name is the same as my sister in laws name. First and last name. Figures

My sister in law has some collection agency's after her and because both her first name and last name is the same, the collection agency are sending her things to my wife. She is trying to avoid them so she so far changed her phone number six times already because they keep calling her.

I guess when they googled the name, the first name that popped up was my wife's and our address. For some reason when doing a credit report and I do not know why, both of my sister in law and my wifes social security are linked together somehow. That is where I am confused also.

But anyhow, all of my sister in laws debt and even bankruptcy shows up on my wife's credit report. She never filed for bankruptcy before and never had several credit cards showing up under her name. She only have one credit card which.

Tried writing to credit beaurea but does not seem to work. I was thinking about hiring those credit counseling to help but didn't want to waist any money if they wasn't going to get anywhere with it. So right now my wife's credit is all messed up because of the social security linking to each other, same first name and last name.

What do you suggest we can do to clear this up and with the least amount of money needing to hire someone to do it.

Thanks

NoSoup · 03-02-2009, 08:24 PM

Quote:

Originally Posted by invalidiuser

Hello, I got a question. My wife name is the same as my sister in laws name. First and last name. Figures

My sister in law has some collection agency's after her and because both her first name and last name is the same, the collection agency are sending her things to my wife. She is trying to avoid them so she so far changed her phone number six times already because they keep calling her.

I guess when they googled the name, the first name that popped up was my wife's and our address. For some reason when doing a credit report and I do not know why, both of my sister in law and my wifes social security are linked together somehow. That is where I am confused also.

But anyhow, all of my sister in laws debt and even bankruptcy shows up on my wife's credit report. She never filed for bankruptcy before and never had several credit cards showing up under her name. She only have one credit card which.

Tried writing to credit beaurea but does not seem to work. I was thinking about hiring those credit counseling to help but didn't want to waist any money if they wasn't going to get anywhere with it. So right now my wife's credit is all messed up because of the social security linking to each other, same first name and last name.

What do you suggest we can do to clear this up and with the least amount of money needing to hire someone to do it.

Thanks

First and foremost, I would almost never recommend going to one of the credit council scams... er... services.

This is a challenging (not to mention frustrating) situation to deal with, but ultimately persistance on your end will pay off.

You can check each of the credit reporting agencies for free at www.annualcreditreport.com and dispute innaccurate data right online. Depending on the specific circumstances, they may require certain documents as proof that it wasn't actually your wife that is on those accounts, but generally they are required to prove that it is, or they are obligated to remove the accounts from your wife's bureaus. Make sure, though, to do this with all three agencies, as most lenders look at a compilation of the three and if it's still reporting to one it will still negatively impact the score and actual loan itself.

Hopefully this helps - let me know if you need anything else

Jadey · 03-24-2009, 04:45 PM

Soup,

Over the last fews years I have been working on paring down a great deal of credit card debt. At one point it was $32,000+ and over the last 4 years I've gotten it down to around $20000. I've recently gotten married and my wife has zero credit cards but just received an offer for a US Bank card with a 3.99% balance transfer rate through 2014. It just so happens my CitiBank card rate was raised to 12% in the past couple of months and it is the one I am focusing on now since it has the highest balance. So my questions is; if my wife got this US Bank card would we be able to transfer balances? Would she need to be added to my CitiBank card as a user? If we did that would it affect whether she is accepted for the US Bank card?

Thanks.

01-13-2009, 11:18 AM	#361 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	I'm not sure, but at the point that he is in the student loans are just debt load. There isn't any history of payments. As far as utilities, that is a slightly different story, but I'll let NoSoup weigh in for that. Just because you have a credit card doesn't mean you'll sink into the 20% interest trap. Again, you have to be disciplined to use the card and pay it off. It is that simple. Some utilities take credit cards. Pay your utilities with the credit card, then pay off your credit card with the same funds you'd be paying with a check. The only difference there is you're "building" credit. Credit cards aren't the only way, it's one of the simplest. You could get any dept store credit card, or small loan (still credit based) to make a purchase for a computer, car, other large durable good. The idea here is to show that you are trust worthy to pay it back. Understand that last few words in that line. Pay it back. See that's the problem with those with the 20% interest trap, they didn't pay it back. They continued to accumulate more debt. And still didn't pay it back. It is a simple recipe. Pay for all the goods you're NORMALLY going to pay cash for with a credit card. Put that CASH someplace safe and don't spend it. Use that CASH to pay off your credit card at the end of the month. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

02-22-2009, 05:05 PM	#364 (permalink)
Sue Teufel Hunden's Freundin Location: Westminster, CO	About Student Loans I've already gotten my federal student loans for 08-09 and 09-10. I'm definitely going to be needing a private loan to make up for my cost of living expenses, which will be about $20,100 per year (including my rent). My question is: In getting a student loan, should I include the tuition for my school, or should I hope that each year the federal student loan will cover me? I'm going to a small, private institution for my BSN. Three years, $72k total (I know it's a lot, but this was my decision). Thanks __________________ Teg yw edrych tuag adref.

02-23-2009, 03:22 PM	#365 (permalink)
NoSoup Non-Rookie Location: Green Bay, WI	Nope- you haven't any guaranteed funding, so you can't include it. However, when you apply, I would point out that you will likely get the funds. If you chose not to, though - there is a term for that. Fraud __________________ I have an aura of reliability and good judgement. Just in case you were wondering...

02-23-2009, 06:06 PM	#367 (permalink)
snowy Kick Ass Kunoichi Location: Oregon	Sue, your school should have Cost of Attendance estimates for you--either you will have to ask the financial aid office for these or they will be somewhere on the website. Cost of attendance figures add up tuition, fees, books, and living expenses (including rent, food, transportation costs, and discretionary spending). Federal loans have annual limits; you will have to see what that is relative to the cost of attendance. This website has a table of loan limits: FinAid \| Loans \| Student Loans What you will likely have to do is apply for a private loan to make up the difference. Estimated cost of attendance is fairly generous (in my mind, may not be to you); I advise that you come up with an alternative budget and only borrow what you need to privately. Private loan companies are not so generous or flexible with their repayment terms. Regardless, both the feds and the private loan company will check with your school's financial aid office to find out what the cost of attendance is, and they will not loan you money above and beyond that cost. A private loan company will only loan you enough to make up the difference between your federal loans and the cost of attendance estimate. If your living expenses are higher than that, you're going to have to find some other source of money. And with the feds, you'll have 2 loans a year--your unsubsidized loan and your subsidized loan. It will most likely be disbursed at the beginning of your academic term. With private loans, try to keep it to one loan a year. It will most likely be disbursed at the same time as your federal loans. I may not be a loan officer, but I have been jumping through the financial aid hoops for a while now __________________ If I am not better, at least I am different. --Jean-Jacques Rousseau Last edited by snowy; 02-23-2009 at 06:08 PM..

01-13-2009, 09:11 PM	#363 (permalink)
TheNasty Tilted	Nosoup: Thank you for your reply, and thanks for this thread! You brought up a very good point about attempting to consider 30 years into the future, thank you for that. There is so much to consider that I really have to try and plan for the future.

03-02-2009, 11:24 AM	#368 (permalink)
invalidiuser Upright	Hello, I got a question. My wife name is the same as my sister in laws name. First and last name. Figures My sister in law has some collection agency's after her and because both her first name and last name is the same, the collection agency are sending her things to my wife. She is trying to avoid them so she so far changed her phone number six times already because they keep calling her. I guess when they googled the name, the first name that popped up was my wife's and our address. For some reason when doing a credit report and I do not know why, both of my sister in law and my wifes social security are linked together somehow. That is where I am confused also. But anyhow, all of my sister in laws debt and even bankruptcy shows up on my wife's credit report. She never filed for bankruptcy before and never had several credit cards showing up under her name. She only have one credit card which. Tried writing to credit beaurea but does not seem to work. I was thinking about hiring those credit counseling to help but didn't want to waist any money if they wasn't going to get anywhere with it. So right now my wife's credit is all messed up because of the social security linking to each other, same first name and last name. What do you suggest we can do to clear this up and with the least amount of money needing to hire someone to do it. Thanks

03-24-2009, 04:45 PM	#370 (permalink)
Jadey This Space For Rent Location: Davenport, Iowa	Soup, Over the last fews years I have been working on paring down a great deal of credit card debt. At one point it was $32,000+ and over the last 4 years I've gotten it down to around $20000. I've recently gotten married and my wife has zero credit cards but just received an offer for a US Bank card with a 3.99% balance transfer rate through 2014. It just so happens my CitiBank card rate was raised to 12% in the past couple of months and it is the one I am focusing on now since it has the highest balance. So my questions is; if my wife got this US Bank card would we be able to transfer balances? Would she need to be added to my CitiBank card as a user? If we did that would it affect whether she is accepted for the US Bank card? Thanks.