Sunday, June 11, 2017

Concerned about Student Loan when applying for a Mortgage Loan? Read below why you shouldn't be!



If you've graduated in the past ten years or so, you might still be paying student debt. Depending on your career path this could equal thousands of dollars. Even with low interest rates, student loans can feel like a big burden especially if you're thinking of buying a home. Most people think that if they have a big student debt that they may not qualify for a mortgage loan because their debt to income ratio might be too high.

In the past, mortgage lenders would calculate 1% of your student loan as your monthly payment. So if you had $100k in debt, which is possible if you chose to be a doctor or a lawyer, your monthly payment would be considered to be $1,000 per month.

Fortunately the rules have change. Your actual student loan payment could be much lower and as long as this is reflected on your credit report we are able to use that as your monthly payment. In many cases this will result in buyers being able to borrow a more realistic amount that fits their budget.

This change on how we calculate student debt took effect this year and it does not apply to all loans, just certain types of loans. If student debt is something that has been keeping you from buying I strongly suggest that you revisit applying for a loan now that things have changed benefitting buyers.

As always I am here to provide information on how to apply for a loan and making the process of buying much easier for our buyers! Don't hesitate to call me if you're thinking of buying, you'd be surprised on some of the things we can do to help our clients.

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