Getting a mortgage loan isn't the easiest thing, especially for those student loan debt. Changes coming to mortgage loans, however, may make the p
Getting a mortgage loan isn’t the easiest thing, especially for those student loan debt. Changes coming to mortgage loans, however, may make the process easier.
For many millennials like Tyler McKirgan, home ownership is that American dream they just can’t reach just yet.
The culprit? Student loans.
“It definitely is a big burden, because millennial wages are low, and student loans are high,” said McKirgan.
Mortgage lender company Fannie Mae, however, is revising their loan requirements, which could ease the burden of debt. As of now, the threshold for debt-to-income ratio is 45%, and if an applicant is over that threshold, they’re not likely to qualify for a conventional loan.
For McKirgan, who is a recent grad school graduate, he knows that feeling of potential rejection all too well.
“I’m at 46% right now, so on Saturday, I’m gonna be jumping for joy,” said McKirgan. Saturday is the day when that threshold will be raised to 50%.
“I think its great opportunity for someone who felt like they can’t buy a home, because they’re so burdened with debt, especially student loan debt.”
That change comes in addition to the many other revisions Fannie Mae has made, which helps borrowers obtain a mortgage, and helps those with home equity reduce student loan debt.
Mortgage loan officer Jeremy Schachter said this doesn’t mean even more debt and a potential market crash like the one a few years back.
“Everything’s full documentation,” said Schachter. “We’re looking at stated income. No documentation loans, where we didn’t ask for documentation, those are kind of long gone.”
Of course, there many factors involved in buying home, but with pre-qualifying being the first and hardest step, many have been stopped.