You’re working with your client to find them the perfect home…but with that student loan on their credit report, they don’t qualify for an affordable mortgage. What can be done?
We sat down with Natalie Luongo of The National Student Loan Center to find help for homebuyers with student loan debt.
Here’s what she had to say!
A negative student loan experience is potentially disastrous on a credit report. Getting consolidation into an Income-Driven plan can begin to have a positive impact and increase your client’s chances of getting a mortgage.
What Qualifies Me for a Mortgage?
- DTI or Debt to Income Ratio
- Credit Score
- Down Payment
Student Loans and Your Mortgage
Your clients have to satisfy the underwriting requirements of the mortgage bank in order to qualify for a mortgage when looking to purchase a home. Depending on how they have managed their student loan debt- their student loans can make a significant impact on their chances of getting a home loan.
When applying for a mortgage the DTI or Debt to Income Ratio is a number used based on your current monthly expenses relative to your income. Lowering your client’s monthly expenses and freeing up their income will only help your client’s chances of getting a mortgage.
- Through Income-Driven Repayment of your Federal Student Loans, there is a good chance that consolidating, certifying for income-driven repayments and utilizing the Forgiveness program could increase your chances of being issued a mortgage.
- Your DTI has to be 43-50% at most in order to qualify. That means a client with a high DTI would be well served by lowering their monthly student loan payments.
- Income-Driven plans could potentially get your client under the DTI threshold and get them a mortgage.
- Could considerably increase the size of the home and mortgage through lowering the DTI.
How Can NSLSC can help you and your clients?
For PreQual and New Purchases we can reduce their monthly payments considerably leading to:
- A more favorable DTI
- A more complete UW file for submission
- Increased Credit Rating
- Increased chances of approval
When enrolled in an Income-Driven Repayment:
- Gives the client a better chance of taking out a larger mortgage.
- The period certain on the Student Loan agreement is typically less than the mortgage term- meaning the Student Loan payments will disappear BEFORE the mortgage payments- decreasing the chance of foreclosure.
- Clients now know exactly how much they will have to outlay over the course of the student loan- making a mortgage payment more affordable.
The benefit to the realtor: Have Client Fill out an application and see what they qualify for: http://nslsc.co/application/
- More qualified clients- and better prepackaging for UW
- Lower DTI and a better chance of not only approval- but approvals for higher-priced houses.
- An increased volume of approvals because a large number of first time home buyers are adversely disqualified because of student loans.
- Affirmation of the quality of your business network- when you refer to us not only do you earn cash for yourself but referring clients to an organization that cares for your clients start to finish makes you a trusted referral source and a realtor with a high professional prowess and the ability to get things done.
Questions? Contact Natalie at National Student Loan Service Center
888-384-0877 Ext 105
646-766-1330 Ext 105