If a monthly student loan payment ( >$0) is provided on the credit report, you may use that amount for qualifying purposes. If the credit report does not provide a monthly payment for the student loan, or if the credit report shows $0 as the monthly payment, the lender must determine the qualifying monthly payment using one of the options below. If the borrower is on an income-driven payment plan, the lender may obtain student loan documentation to verify the actual monthly payment is $0. The lender may then qualify the borrower with a $0 payment. File must contain documentation that the payment is an Income driven payment plan (also known as IBR or Income Based Repayment) For deferred loans or loans in forbearance, the lender may calculate (a) a payment equal to 1% of the outstanding student loan balance (even if this amount is lower than the actual fully amortizing payment), or (b) fully amortizing payment using the documented loan repayment terms. This applies to both purchase and refinance loans so call me to discuss more options on qualifying for a home loan when you have student loans! For more great content on how your purchase power is affected by student loans click here. By David Hughson Broker | Mortgage Planner 858-863-
I may have just missed the student loan debt explosion when I graduated with my undergrad degree in 1998. While college was expensive to attend twenty years ago, we were all borrowing money to get an education, it was nothing compared to the amounts borrowed during the college financing boom of the last fifteen years. Nowadays young people are in record amounts of debt the moment they are handed a diploma which means starting off their earliest earning years with essentially a thirty year mortgage to pay back. College ain’t what it used to be and many times all this borrowed money is for a degree that yields earning power guaranteed to tie up their income for the better part of their career. The student loan income-based repayment plans have been a help to many people. These plans allow monthly payments to be calculated based upon a person’s income which give people a fighting chance to start paying back their loans and be able to eat as well. This is a big deal for those just starting out but there are at least two challenges tied to this calculation. First, the debt will take that much longer to pay off and second when you go to apply for a mortgage the bank approving your application will hit the person for up to 1% of the balance of the
Written by Bob Hunt on Monday, 20 April 2015 What we know for sure is that there is a lot of student loan debt out there. What we know or believe with less certainty is what kind of effect that debt has on the real estate market — both now and in the future. The total amount of student loan debt is staggering. The Consumer Financial Protection Bureau (CFPB) estimated it at $1.2 trillion in May of 2013, and it is a figure that has been rapidly growing. In the period from near the end of 2011 until mid-year of 2013, outstanding student loan debt grew approximately 20%. During that same period, credit card debt increased about 2%. Student loan debt is now the second largest category of consumer debt, exceeded only by mortgage obligations. According to Forbes Magazine (August 2013), approximately 2/3 of those currently graduating from colleges and universities will have loan debt. The average amount is around $27,000. Nor does this just apply to four-year schools. Of students completing associate degrees from community colleges in 2008, “38% graduated with debt. In the for-profit sector of two-year degrees, over 90% have debt. The average debt load at a public two-year institution is $7,000.” Moreover, student loan debt is, in general, somewhat less than golden. A recent Wall Street Journal article (April, 2015) cites a study from the St. Louis
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