Have Student Loan Debt?
A Solution May Exist For You
I'm sure you've seen these headlines or others like them ...
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.
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.
- 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.
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).
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.