Great news for those that have Student Loan Debt! See below on ways Fannie Mae is increasing affordability with reducing rates when you pay off student loan debt through refinancing your home and other fantastic improvements when you are buying a new home. This only pertains to conventional mortgages at this time.
Offer homeowners the opportunity to pay off student loan debt and the opportunity to lower overall monthly payments.
Lenders can offer homeowners who have at least 20% equity in their homes a cash-out refinance to pay off one or more student loans.
Borrowers will have an opportunity to convert higher interest rate student debt to a lower interest rate and potentially reduce monthly debt payments.
Accept the student loan monthly payment amount on the credit report.
Lenders can now simply accept the monthly student debt payment amount listed on the credit report.
By being able to use the actual reported payment on the credit report, lenders should now be able to qualify existing homeowners and potential homebuyers for higher loan amounts!
**Disclaimer: Per Fannie Mae, a student loan in deferment or having a payment of zero must qualify by using either 1% of the outstanding student loan balance, or a calculated payment that will fully amortize the loan based on the documented loan repayment terms.
Information courtesy of Bill Holmes with Front Street Mortgage