Posted 10/01/2017

New mortgage pays off student loans, too

mortgage that pays off student loans

Gina Pogol

The Mortgage Reports Contributor

Buy a home (now!) with student loans

A recent study by the national Association of Realtors (NAR) concluded that student loans are adding seven years to the time it takes for young adults to afford a home. Millennials are piling up student debt at a rate unseen by previous generations, and they need help.

One new program sponsored by Lennar Homes and its lending subsidiary, Eagle Mortgage, may deliver exactly the assistance these would-be homebuyers need.

Verify your new rate (May 20th, 2018)

The Realtor study showed that homeownership is low among millennials — just 20 percent own a home. This is most likely because they carry student loan balances averaging $41,200, while their average income is just $38,800

Of those who did not own their dwellings, 83 percent blamed their renter status  on their student debt. They expect this debt to put off their home purchase by a median seven years.  And 84 percent expect to put off buying property for at least three years.

The big print

Eagle Home Mortgage’s Student Loan Debt Mortgage Program provides up to $13,000 for student loan reduction or payoff.

 

Borrowers who purchase newly-built homes from Eagle’s parent company, Lennar Homes, can get up to 3 percent of the purchase price for paying their student loans.

According to the company, this does not increase the purchase price or the mortgage balance.

Borrowers must qualify for financing. They can choose mortgages with down payments as low as 3 percent.  The program’s maximum loan amount is $453,100.

In addition to the 3 percent contribution to student loan balances, buyers may also be eligible for other incentives, like credits toward closing costs.

The fine print

It’s not all rainbows and puppies. According to Lennar, it will contribute up to 3 percent of the purchase price of a new home for paying down student loans.

It can’t be used by parents who took loans to pay for their children’s education.

According to Eagle Home Mortgage, the Student Loan Debt Mortgage Program is being offered on a trial basis with new Lennar homes nationwide.

The Lennar program is a new twist, a creative attempt to tap a huge market of young people who want to buy houses.

Not the only game in town

Fannie Mae was the first to jump in with an expanded its student loan cash-out refinance program. It allows homeowners with studentloans to use the home equity they accrue to pay off student loans.

So students that buy homes today may use tr increasing value to whittle their student loan balances down the road. It also created policies to help borrowers with student loan debt qualify for mortgages.

What are today’s mortgage rates?

Current mortgage rates are very attractive and unlikely to go down in the near future. In addition, home prices are increasing in most markets across the

US. Buyers with student loans could use the home they purchase today to pay off their loans — either through a program like Eagle’s, or a refinance like Fannie Mae’s once their property appreciates a bit.

Verify your new rate (May 20th, 2018)

 

 

Gina Pogol

The Mortgage Reports Contributor

Gina Pogol writes about personal finance, credit, mortgages and real estate. She loves helping consumers understand complex and intimidating topics. She can be reached on Twitter at @GinaPogol.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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