Home Buyers with Student Loans Receive Some Good News
Maybe student loans have kept you from jumping in and buying a home. It may not be as difficult or as scary now with a large change coming from Fannie Mae. The new rules will make it easier to purchase a home for the first time or even use refinancing to pay off student loan debt.
About 43 million Americans currently carry student loan debt in the amount of $1.4 trillion nationwide. This causes the borrower to struggle when it comes to saving money and getting approved for a mortgage. Many Americans saddled with student loan debt remain renters or live with parents.
Three Big Changes from Fannie Mae
Three new changes will help to allow those with student loan debt to become homeowners. The changes include:
- Actual amount you pay with the reduced-payment plans will count in the debt-to-income ratio instead of the original payment.
- Lower cost for a “cash out” refinance, which includes those participating in the “parent plus” program. Extra fees have been waived, as long as cash out will be used to pay off student loans.
- Any nonmortgage debts being paid by someone else (parent paying your credit card bill) will no longer count in the DTI computation.
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These three changes will make it easier for many to go from renters to homeowners.