Fannie Mae recently unveiled new options for homeowners with student loan debt aimed at alleviating the burden of payments and opening up credit availability. The options include opportunities for homeowners to exclude non-mortgage debt paid by others in a mortgage loan application and to pay down student debt with a mortgage refinance, and the opportunity for lenders to accept student debt payment information listed in credit reports.
“We understand the significant role that a monthly student loan payment plays in a potential homebuyer’s consideration to take on a mortgage, and we want to be part of that solution” said Jonathan Lawless, vice president of Customer Solutions at Fannie Mae, in a statement. “These new policies provide three flexible payment solutions to future and current homeowners, and, in turn, allow lenders to serve more borrowers.”
The Student Loan Cash-Out Refinance option offers homeowners the ability to pay off high-interest rate student debt while potentially refinancing to a lower mortgage interest rate. The Debt Paid by Others option offers homeowners the ability to exclude non-mortgage debt (including student debt) from their debt-to-income (DTI) ratio if the debt is paid by someone other than the homeowner, widening eligibility. The Student Debt Payment Calculation offers lenders the ability to accept student debt payment information listed in credit reports.
Source: Fannie Mae
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