How Do Fannie Mae’s Recent Changes Affect Those With Student Debt?

Today I want to inform you about how Fannie Mae, the nation's largest underwriter of mortgages, recently introduced three new rules that will affect those with student debt.

If you have a student loan or you are a cosigner on one, I have some good news for you. 

Fannie Mae, the nation's largest underwriter of mortgages, recently introduced three new rules that will affect those with student debt.

These new rules can make it easier to get a mortgage, and they can make it easier to pay off your (or your kids’) student loans.

The first change is for those on income-based repayment plans, where having a high debt-to-income ratio is the No. 1 reason for not being approved for a mortgage. 

Fannie Mae previously used a very conservative 1% of the total loan instead of the actual monthly payment. This can drastically lower your debt-to-income ratio and give you a much better chance of qualifying for a mortgage.

Some folks are lucky enough to have their student debt paid by their parents or even by their employer. The thing is, Fannie Mae didn't take this into account when calculating the debt-to-income ratio. That's the second new change.

If your employer or your parents have been paying off your student debt and you can show evidence of this for the past 12 months, then this debt won’t be counted in your debt-to-income ratio. This makes it more likely you will qualify for a mortgage.

If you can qualify for a mortgage right now, you definitely should.

If you can qualify for a mortgage right now, you definitely should. Rates are still at a historical low, and lots of great houses have recently come on the Libertyville market.

Fannie Mae also makes it possible to refinance your mortgage for more than the value of your home. Normally, there is a 0.25% fee that applies to any cash you take out in this way.The third big change is that Fannie Mae will now waive that fee when you use this cash to pay off a student loan. 

This applies whether the loan is yours, or you're a cosigner. If the mortgage rate is significantly lower than the student loan rate, it can make sense to refinance in this way, and the new rule makes it cheaper to do so. 

If you need help understanding these new guidelines to see whether they’re right for you, or you have questions about putting them into practice, get in touch with me. I’ll be glad to help. 

I hope to hear from you soon!

You Don’t Need a Down Payment

Today, I want to share with you all the options you have for an affordable down payment as a homebuyer.

What's the biggest obstacle to homeownership?

According to a recent survey, "saving enough for a down payment" comes at the top of the list. A whopping 55% of prospective homebuyers cited this as their main stumbling block.

And with the continuing growth of home prices, things aren't getting any easier. In fact, homeownership rates reached a 20-year low last November.

It wasn't always like this. 

A decade ago, many lenders were offering easy, no-money-down mortgages. 

However, after the financial crisis, mortgage standards have become more restrictive. A typical mortgage now requires a 20% down payment. 

"55% cited the lack of a down payment as their main stumbling block."

Here's the good news. 

If you have decent credit and a steady income, you might be qualified for a number of specialized programs that require no or very little down payment. Here are a few of the top options.

First, there's the USDA loan, which is valid for homes in certain regions, such as rural and suburban areas. 

With zero money down and lenient credit requirements, the USDA loan can be a great choice for many homeowners. 

Second, there’s the VA loan, which you can apply for if you or your spouse served in a branch of the military.

It's possibly the most generous zero-money-down mortgage because of low interest rates and low closing costs.

Third, there's the FHA loan. It does require a 3.5% down payment — still drastically more achievable than the 20% required for a conventional mortgage. 

Finally, there are a number credit unions and first-time homebuyer programs that might apply to your particular situation.

There’s one important thing you should know.  

If you get one of these no-money-down mortgages, chances are good you will be required to pay private mortgage insurance, which can drive up your monthly payments.

Fortunately, private mortgage insurance will disappear after your mortgage balance is under 80%. Also, the money you do pay will be tax deductible in most cases.

In short, there are lots of options to make owning a home a reality for you, even if you haven't saved up tens of thousands of dollars.

If you're considering buying a home, give me a call and we can discuss your options.

Buying a Libertyville Home? Click here to complete your loan application.

And if you need more advice on getting a no-money-down loan, give us a call at (847) 362-1335.

Tips to Replenish Your Self-Confidence

I recently read some advice for self-confidence from a teenage girl's website, and I think it can actually be really helpful to you and your career. Try thinking about these scenarios in a different way to help yourself.

Sometimes when we use our same introduction or phrasing over and over again, we can get a little bit stale. In turn, I think we can also lose a little bit of self-confidence.

I came across this recent bit of advice from a teen girl's website, actually. It's something you can share with anyone to help with the idea of self-confidence: "What can I say to myself?"

Instead of thinking you're not good at something, ask yourself what you're missing.

Instead of "I'm not good at this," try thinking "what am I missing?" Instead of "I'm awesome at this!" try thinking "I'm on the right track." Instead of "I give up,” try thinking "I'll use some of the strategies we've learned."

Instead of thinking "This is too hard," think, "This might take some time and effort." Instead of, "I can't make this better," think, "I can always improve, so I'll keep trying." I think this is something I struggle with in my own office. Likewise, another one that was kind of personal and funny to me was, "I just can't do math." I never said I couldn't do math, but I was never fond of algebra.

Instead of "I made a mistake," think "Mistakes help me learn better." Instead of "She's so smart, I'll never be that smart," think "I'm going to figure out how she does it so I can try it (or so I can kick her ass!)"

Another one I really like is instead of thinking, "It's good enough," think "Is it really my best work?" I've had this situation transpire with me several times over the last year with people I've met through networking groups that I hired. I was disappointed in their work knowing that they didn't do their best, and this is something that I started asking them. I'd say "I'm going to pay you for this, but is this really your best work?"

Finally, the last item was, "Plan A didn't work," when you should be thinking, "Good thing the alphabet has 25 more letters."

Hopefully, this helps you in your networking and your education. If you have any questions for me or there's anything I can do to help you in your career, give me a call or send me an email. I'd love to help you out!