In the past year, Fannie Mae has made some massive changes to their lending guidelines when it comes to student loans.
First, they introduced loosened guidelines when it comes to how monthly student loan payments are qualified as a monthly payment. And in addition, they also introduced a program that allows homeowners to obtain a lower interest rate home loan, to pay off their student loans through a traditional cash out refinance.
Student Loan Cash Out Refinance
Fannie Mae has introduced a way to make it easier for homeowners to use home equity to pay off student loans.
If you own a home and want to use some of your home’s equity to pay off a student loan through a cash out refinance of your home, you can obtain a Fannie Mae conventional loan to do so, at the same rate as a rate and term refinance, in which you are not do pull equity out of the home.
Typically, if you pull equity out of your home through a cash out refinance for any reason, then you will pay a higher interest rate than a non-cash out refinance. Still, homeowners often do pull equity out of their homes to pay off higher rate credit cards or other debts.
However, through this new program, if you complete a cash out refinance and the proceeds from the cash out refinance are used solely to pay off a student loan in full, then you would not pay a higher interest rate.
With student loan interest rates on the rise and home mortgage rates still near historic lows, it may make sense to use home equity to eliminate monthly student loan payments.
As always, it makes sense to speak to a licensed lender, such as Strategic Mortgage, to look at all options for your specific situation.
For more information on current home loan programs and options for existing and potential homeowners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: firstname.lastname@example.org or online at www.strategicmtgaz.com
Strategic Mortgage, LLC - NMLS#158804- Equal Housing Lender – AZBK#0909514
Vasilios Bill Kamboukos Jr – NMLS#160440