Have Student Loan Debt?
A Solution May Exist For You
I'm sure you've seen these headlines or others like them ...
It's a sad fact. Student Loan Debt is a huge concern for many consumers in the present economy. And because of that, it's become a huge concern for the commercial and governmental sectors too. Rightfully so.
In a previous article, "Student Loan Debt Guidelines Simplified by Fannie Mae", I spoke of Fannie Mae, (the GSE, Government Sponsored Enterprise that oversees and ensures mortgage liquidity and guidelines to many Banks, Lenders, and Mortgage Providers) and how their recent clarification of rules made regarding the calculation of Student Loan Debt addressed this very issue.
Those new clarifications were favorable for home buyers with Student Loans. In fact, the new changes may be instrumental in making home buying a reality for many that thought it impossible before.
The April 25, 2017, changes provided Mortgage Underwriters with the ability to accept the Student Loan Debt payment amount listed on an applicant's Credit Report.Or in those cases where the payment amount doesn't show on the applicant's Credit Report, they can now use 1% of the outstanding debt or a manually calculated, fully amortizing payment. That is welcomed change and in flexibility.
But there is also another valuable too often overlooked feature to be found within these recent Fannie Mae changes.
That's the "Student Loan Cash-Out Refinance Option".
Although a Cash-Out Refinance to pay off debts (of any kind) has long been available for homeowners holding equity in their home, Fannie Mae's 2017 springtime changes contain a new option for those with Student Loan Debt to consider.In the case of this new option:
- The Borrower must pay off at least one (1) Student Loan in its entirety
- Proceeds of the Cash-Out Refi must be paid directly to the Student Loan Service Provider at Closing
- Student Loan Debt must be paid-in-full with the proceeds of the Cash-Out Refinance (Partial payments are not permitted)
- The new option "forgives" or "eliminates" certain costs normally charged to the Borrower that is conducting the Cash-Out Refinance
- The saved costs can result in either a Lower Interest Rate or additional "cash out" at Closing time.As with many new loan programs, there will be a bit of a learning curve as to the "ins and outs" associated with it. But for current homeowners with specific criteria, there can be some much-needed relief found by pursuing a Student Loan Cash-Out Refinance.
Those that can benefit from this Student Loan Cash-Out Refi are:
- Current homeowners with (sufficient) equity
- Homeowners of any Property or Occupancy Type
- Homes cannot be For Sale at the time of disbursement
- Personally obligated Student Loan Borrowers
- Those looking to reduce/eliminate higher interest rate Student Loans
- Those looking to reduce/eliminate higher Student Loan payments
- Parents (the Homeowner) who may have co-signed on a student loan for a son/daughter and is willing to take on the debt as "mortgage debt" rather than a Student Loan. (Currently, there is a tax benefit to doing so).The takeaway from the info above should be this: Whether someone with Student Loan Debt dreaming of buying a home in IL or WI ... or a current homeowner hoping for some debt relief ... it's worth your time to talk with me (or your own LO) to get the facts regarding the existence of any financing options that could be of benefit to you. You won't know what's possible until you do.
More changes are needed to address the serious Student Loan Debt issue. These are not nearly enough and they've been too long in coming. But it's a positive that we're finally beginning to see some small steps being taken to address Student Loan Debt and the stranglehold it places on those that possess it.
Contact me to learn if these changes impact your ability to lower your monthly Student Loan payments, their interest rate, to eliminate your Student Loan Debt, or if other options exist to help you buy or save money ...
* Looking to find what solutions and possibilities exist for you? Hoping to Buy or Refinance a Home in New Lenox or elsewhere in the Chicagoland-IL-WI area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.I'm easily found at:Gene MundtMortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI LicensedAmerican Portfolio Mortgage Corp.nmls #175656Direct: 815.524.2280Cell/Text: 708.921.6331eFax: 815.524.2281
Mortgage Originator - NMLS #216987
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Gita Bantwal is a Realtor with RE/MAX Centre Realtors in Bucks County, a Northern suburb of Philadelphia. You can view 1000s of listings on her web site www.GitaBantwal.com
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Gita specializes in Active adult communities and is a Seniors Real Estate Specialist. She holds the ABR designation (Accredited Buyers Representative) and specializes in selling to first time buyers as well as move up buyers.Gita also hold the CRS designation , Certified Residential Specialist and the CDPE designation as well. Information about real estate market is deemed to be correct but is subject to errors and omissions and should be verified independently.. Opinion expressed by me or others in my post and comments is not to be construed to be legal advice.I am licensed in Pa. Check real estate laws in your state as they may be different than in Pa.