Good News for Home Buyers with Student Loan Debt! If you are burdened with student debt that stymies your ability to save money and become an eternal renter or camped out in your parents' homes, there are some new programs that can help you!
Call, text me or email and I'll fill you in and get you started on taking advantage of the two new options below! Brenda Workman 843-543-8101; email@example.com
1) Charleston SC Home builder offers to pay some student debt to spur home purchases!
2) Mortgage investor Fannie Mae has recently made loan qualification easier for you to purchase a first home or do a "cash-out" refinancing to pay off your student debt!
Here are three ways that the new rules could affect you:
If you participated in federal reduced-payment plans on your student loan, your actual monthly payments, as reported to the credit bureaus, will count toward your debt-to-income (DTI) ratio calculations. If your payments were originally supposed to be $500 a month but you've had them reduced to $100 through an "income-based repayment" plan, only the $100 will be added to your monthly debts for DTI purposes. Previously, lenders were required to factor in 1% of your student loan balance as your monthly payment on the student loan, even though you were actually paying a fraction of that. As a result, many borrowers' debt ratios were pushed beyond most lenders' underwriting limits.
If you are still carrying student debt, Fannie has lowered the costs of a "cash out" refinancing, provided the extra cash you pull out from your equity is used to retire your student debt. Among the potential beneficiaries: parents participating in "parent plus" programs that help pay off their kids' student debts, and parents who have co-signed for their children's student loans. Fannie is eliminating the usual extra fee it charges for cash-outs, as long as the funds that borrowers withdraw pay off student loan debts.
If you have non-mortgage debts that are being paid for by someone else -- say your parents pay your monthly credit card balances -- these no longer will be included in your DTI computation, provided the payments have been made steadily for 12 months. This should improve the debt ratios of young buyers who are still getting a little help on their cash flows from Mom and Dad.
These Home Builder and Fannie Mac's student loan changes are a big deal. Let's see what we can do to get you into a home.