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Refinance student loans before or after applying for physician mortgage?

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  • Refinance student loans before or after applying for physician mortgage?

    I signed with a private group and will not be eligible for PSLF. So I am planning on consolidating my loans with SOFI to get a lower interest rate. Should I wait to do this until after I've been pre-approved for a physician mortgage loan? Will my student loans be viewed differently by mortgage lenders if they've been refinanced?

    thanks in advance for your help

  • #2




    I signed with a private group and will not be eligible for PSLF. So I am planning on consolidating my loans with SOFI to get a lower interest rate. Should I wait to do this until after I’ve been pre-approved for a physician mortgage loan? Will my student loans be viewed differently by mortgage lenders if they’ve been refinanced?

    thanks in advance for your help
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    Debt to income ratio, and credit score.

    Loans are loans, and debt is debt, the mortgage lenders will look at your debt to income ratio. (how much do you spend on debt each month). So, sometimes they'll want to know your monthly debt payment. if you can have the lowest payment per month, that will help you qualify for "more house". Some physician lenders will use the "1%" rule. They'll ask how big your loans are, and assume you have to pay 1% of the principle each month. It's not a bad rough estimate.

    For our first house, we didn't refinence but instead first changed all the loans to 25 or 30 year graduated repayment. The mortgage company then saw we had low monthly payments, thus a low D:I, thus they approved the mortgage. We refianance the student loans a 4 days after we had closed. We couldn't have been approved for our 5yr refinance student loan payments if we'd refinanced first.

    What is really important, is to remember getting credit initially lowers your credit score, so if you're on the 720/719 line, you may need to wait until its back up before you refianance the debt to get an acceptable interest rate.

     

    The biggest item you need to consider is what can you really afford, so you don't buy too much house. Once you have that solidified, you'll be able to determine if you need to do 25 yr repayment tricks, or if you can simply get the mortgage regardless of your student loan burden.

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    • #3
      I would refinance the student loans first so you can get as good of a rate as possible on that debt first.  If you sign up for a new mortgage or start shopping, the hard credit pulls might bring your score down a bit and could affect the rates offered.  IMO it's more important to get a good rate on your student loans since none of that debt is deductible.

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