Anyone who’s been to college on a student loan understands how massive these debts can be. Today’s average undergraduate leaves college with more than $30,000 owed in student loans! It can take many years to pay them off. People still in debt with student loans look at them as a hindrance when it comes to home ownership. However, Fannie Mae continues to take steps that will help current homeowners (and those looking to be homeowners) who are saddled with student loan debts.
Fannie Mae is a government organization and they buy many home loans originated by mortgage lenders. They certainly understand the growing concern of educational loans. Ultimately, more people owning houses within their means is good for the economy, which is why they want to keep home loans accessible.
The good news is new policies are being put in place to expand options for cash-out refinances and new home loans. Let’s take a look at what’s happening and how it might affect you.
Cash-Out Refinancing to Pay Off Student Loans
Fannie Mae has expanded their cash-out refinance options for current homeowners. A cash-out finance allows you to take out some of your equity as you refinance your loan at a lower interest rate. The new guidelines from Fannie Mae allow homeowners to pay off high-interest, usecured student loan debts at much lower rates. Obviously, you are not eliminating your debt, but you are attaching it to your home loan in order to secure a better rate and terms.
No More Cash-Out Refinance Fees
As long as the money being cashed-out is going to pay off student loans, Fannie Mae will eliminate the standard extra cash-out refinance fee. Again, this is a money-saving opportunity over the long run.
The news is also good for those looking to buy a home. Debts that are currently being paid off by others (for instance, your employer or parents may be helping pay off credit cards or student loan debts) can now be excluded from your mortgage loan application. This improves your debt-to-income ratio and will give you a much better chance at securing the home loan. Likewise, your co-signer(s) will also benefit from this rule if they are looking to refinance or move up with a new home loan. Potentially 8.5 million people could benefit from these new Fannie Mae guidelines.
If you have a student loan debt and you have been waiting on the sidelines to purchase or refinance a home, you might not need to wait any longer. To learn more about these new Fannie Mae guidelines and to walk through your home loan or cash-out refinance options, call Transparent Mortgage today at (619) 929-0199.