Fannie Mae Simplifies Guidelines for Student Loan Debt

Reblogger Nick Vandekar, 610-203-4543
Real Estate Agent with Long & Foster Real Estate Inc 610-225-7400 PA License - AB067198

Several years ago I had a rental listing for a client. As I was showing the apartment to a young man I asked, "Why are you renting and not buying?" His answer I have a lot of student debt and don't think I can qualify for a mortgage.

Well after a short conversation with a mortgage provider we knew, he changed direction and ended up buying a three bedroom home and becoming a home owner rather than paying someone else's mortgage for them.

I did also rent the apartment and fulfilled my duties to my landlord as well. Not everyone will qualify to buy but as this article states clearly the guidelines on student debt are being simplified and will allow more people to purchase their first home.

So, it is probably worthwhile checking to see if you can purchase for yourself rather than paying someone else's mortgage for them. Then contact Nick Vandekar, Tredyffrin Easttown Realtor with Long & Foster Real Estate, Inc., Nick@VandekarTeam.com, office 610-225-7400, cell or text 610-203-4543 and let us help you get set up to buy your new home.

 

Fannie Mae Simplifies Guidelines

for Student Loan Debt


 Tackling Student Loan Debt
 
 
It's been a long time coming, but Borrowers that hold Student Loan Debt may have finally caught a break ...
 
Made effective on April 25, 2017, Fannie Mae gave Mortgage Lenders a much more definitive process with which to calculate Student Loan Debt ... a simplification that was definitely needed and long waited for. Until this change, it had been a real challenge for Mortgage Lenders to compute the actual Student Loan Debt of a potential Borrower.
 
Why?  
 
Not all Student Loans get repaid in the same way.  Nor do all Student Loan Services report Student Loan Debt the same way to the Credit Bureaus.  The waters were pretty muddy for Lenders as to how to use the info available, (if it was available at all). 
 
This new change by Fannie Mae addresses the Debt-to-Income - Qualifying  (DTI) ratio calculations used by Mortgage Lenders while considering Student Loan Debt.  
 
The new simplification states:  
 
     Mortgage Lenders can now accept the Student Loan Debt payment amount listed on a Credit Report.  If the Student Loan Debt does not appear on the Credit Report, Mortgage Lenders can use 1% of the outstanding debt ... or ... a manually calculated, fully amortizing payment.  
 
While this simpler approach won't help every potential Borrower, it removes some financing obstacles and makes it easier for Mortgage Lenders weighing mortgage approval for those applicants with Student Loan Debt.  It should open the door for more potential Borrowers with Student Loan Debt to qualify for a Mortgage and buy homes.
 
April was a busy month for Fannie Mae, as they also announced they're loosening another lending guideline.  
 
The guideline referred to now reads:
 
  • Certain debts paid by non-Borrowers can be omitted from a Borrower's Debt-to-Income - Qualifying Ratios (DTI) when the past 12 months of payments have been made satisfactorily.  (This addresses debt reporting on a Borrower's Credit Report (such as credit cards, auto loans, and student loans) that is paid by someone other than the Borrower.

 

It also addresses possible Refinance opportunities:

  • Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high-interest rate student debt while potentially refinancing to a lower mortgage interest rate.  

These announcements are positive signs as they provide hope, assistance, and relief to those with Student Loan Debt.  They are also an indication of a "relaxing" lending climate as we head into the busy summer real estate market.  
 
At minimum, they show a general movement in the right direction to address the crushing Student Loan Debt keeping so many young Americans out of the housing market.  These timely changes should allow more of these types of Borrowers to qualify for Conventional Loans.
 
So, what should a hopeful New Lenox - Chicagoland Home Buyer/Borrower with Student Loan Debt do next?  
 
Take the following step-by-step action: 
  • Assess your Student Loan accounts
  • Educate yourself on ALL options available to you regarding your Student Loan Debt
  • Make adjustments to your accounts that address your current and long-term needs
  • Seek guidance and assistance from me, your Mortgage Originator.  Ask questions! 
 
These recent changes will have an impact.  Avenues to gain Mortgage Approval will be opened for many.  Does that include you?  To know for sure, you need to ask questions and take action to find out.
 
If you're hoping to buy a New Lenox - Chicagoland home, take that action now.  Contact me to discover what financing options are currently available to you ...

 


            

* Looking to find what possibilities exist for you?Hoping to Buy or Refinance a Home in New LenoxWill County, or elsewhere in the Chicagoland 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 Mundt

Mortgage Originator - nmls #216987 - IL Lic. 031.0006220 - WI Licensed

 
American Portfolio Mortgage Corp.
nmls #175656

  

Direct:  815.524.2280

Cell/Text:  708.921.6331

eFax:  815.524.2281

www.genemundt.com

gmundt@goapmc.com

American Portfolio Mortgage Corp.

NMLS #175656
 
 
 
 
 

  

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 Mortgage Originator  -  NMLS #216987    

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Pennsylvania Chester County Devon Tredyffrin Easttown
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Tags:
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Rainmaker
3,247,990
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Nick and Trudy

This will be a big step forward on getting buyers approved with student loans.

Good luck and success.

Lou Ludwig

May 03, 2017 07:58 PM #1
Rainmaker
4,101,450
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Nick & Trudy, I missed Gene's post, so thanks for the re-blog.  I am working with many first timers right now with student debt, great info! 

May 04, 2017 05:56 AM #2
Rainmaker
778,553
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Lou Ludwig I agree this will be abig help.

Joan Cox it was a well written explanantion as well.

May 04, 2017 01:18 PM #3
Rainmaker
525,554
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

That will enable much more people to qualify for a mortgage and get into homeownership.

Jul 18, 2017 11:29 AM #4
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Rainmaker
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Nick Vandekar, 610-203-4543

Tredyffrin Easttown Realtor, Philly Main Line
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