Buying A Home
SittingOnAMtnTop
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Impact on Getting Mortgage: paying off student loans
We are trying to buy our first home. DH has approx. $40,000 in student loans. Will it hurt his credit or chances of getting a mortgage if we pay off his student loans entirely at once before we go and get approved for a mortgage? We also have enough for 20% down and a stable income.
I can't seem to find a definitive answer online. Thanks!
Re: Impact on Getting Mortgage: paying off student loans
Paying off debt of any kind will only improve your DTI (debt to income ratio) which is a good thing.
Will you still have a good emergency fund in place after paying off the SL?
It won't hurt you at all.
But, if paying them off to $0 means raiding your e-fund then maybe do a sizeable SL payment, but be sure you leave your rainy day fund.
Years ago, I paid off a second mortgage on a home and my car loan at the same time and my credit score took a slight hit because of a reduction in open credit lines. Nothing crazy, though.
It should be seen as positive that you are paying the student loan off in full, but just to be safe I'd ask the folks processing your loan for their thoughts on the timing of this. Our mortgage broker was very helpful in telling us what to do and not to do.