Student Loan “Cash-Out Refinance”
The new changes Fannie has put into place will waive the increased fees & higher interest rates associated with “traditional cash out” refinance transactions.
Mortgage Lenders (including Griffin Funding) have changed how student debt is calculated by accepting the student loan re-payment amount listed on the clients credit report. Previously, lenders were required to factor in 1% of the student loan balance monthly payment on the student loan and many borrowers’ debt ratios were pushed beyond most lenders’ underwriting limits.
Students on an “income-based repayment plan” typically have lower payments and now ONLY the monthly repayment amount counts toward the debt-to-income ratio to determine mortgage eligibility.
Currently there are over 5 million borrowers who participate in federal reduced-payment plans student loans but they often couldn’t qualify for home ownership because of the way their debt to income was calculated.
Contact Griffin Funding for more information on student loan mortgage options at 888-721-0003 or fill out our contact form.