The Bibel Team: Student Loan Debt

Eric: Hey everyone. Eric Bibel with the Bibel team at NEO Home Loans. I’m here today to talk to you about student loan debt.

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If you like the content that you’re seeing here today, please like, subscribe, comment. It helps to ensure that we continue to be able to get our message out. Again, today I want to talk to you about student loan debt. Ton of questions out there, as there should be. Over 45 million Americans in some way, shape or form, have some form of student loan debt. And most importantly, why we want to discuss it is, it can absolutely have impact in your ability to purchase a new home. So historically, looking back to the past, when someone came to us with student loan debt, whatever that payment was, or a factor of the balance would ultimately have impact to your ability to qualify for a new home purchase. Now, if you look at somebody that’s entering, say, the medical field, engineering field, law field, there are some pretty tremendous student loan obligations tied to that, which effectively can be a mortgage, and in turn, really impact your ability to secure a new mortgage on the property.

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Fast forward to today, and we look at where advancements have come with how repayment is calculated. Some of our strategic partnerships here at NEO have allowed us to kind of sidestep some of the requirements from a documentation standpoint on how those repayment components work. So, rewinding to the past, when student loan debt came up we saw whatever that payment was, or a factor of the debt due, impacts your ability to qualify. Advancements within Fannie Mae and Freddie Mac allow us to now take a percentage, anywhere between one and half percent of the total debt that’s owed, to count against your debt to income ratios. And again, debt to income ratios are total debts divided amongst your gross monthly income. That becomes your debt income ratio. That’s determinant in what your ability to seek financing is. So, ability to take on new obligations against home financing.

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Our strategic partnership, and really where NEO has led the forefront in, is through this program called Loan Sense. Loan Sense gives us the ability to align with specific government programs on behalf of borrowers to reevaluate the total debt that is associated to student loan debt, to help further propel outside the traditional Fannie Mae and Freddie Mac guidelines around repayment to further expand one’s ability to purchase. Now, one thing with student loan debt is that a lot of the programs that are out there, employment that individuals will seek, there’s forgiveness that is associated to the student loan debt. Meaning, after a certain period of time through fellowship, through employment, that debt becomes forgiven. So within that, sometimes a borrower will elect to take forbearance or defer out those payments to allow for the forgiveness to take place.

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Well, we still have to take consideration of that debt as being owed by you. With our partnerships, we now get to factor in what was classically defined as income driven repayment. So, you have a specific income. You have whatever your debt owed on the student loan, federal government, or whoever is servicing that loan would determine, hey, this individual can now pay X amount. We typically would not be in a position to utilize that lower payment, but with our partnerships again, with Loan Sense, we now are able to align with specific government programs to further reduce that debt burden, expanding your possibility to get into a home sooner, start building your equity, building your wealth, and really laying the foundation for your future success. We would love the opportunity to dig further into this with you. Please give me and my team a call today. Thank you.

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