3 ways to help borrowers with student loans qualify for a mortgage
  • Alan Hayon

3 ways to help borrowers with student loans qualify for a mortgage

Updated: Sep 19, 2019

Did you know that over 44 million Americans collectively hold nearly 1.5 trillion in student debt? That is Trillion with a T. This has become a major barrier to home ownership in America.

Leaving more than 80 percent of people ages 22 to 35 with student debt, and who haven’t bought a home yet.

That is why Alan Hayon has been making every effort to make borrowers and Loan Originators aware, that dealing with student loan debt is something they both need to be prepared for when going through the mortgage approval process. One of the best ways to combat this onslaught of borrowers with student debt is to consolidate their student loans. Here are 3 reasons why consolidating their loans can increase their borrowing power.

It reduces the monthly obligations and improves debt ratios. The median income for student loan borrowers is $59,746, according to analysts at the Harvard joint center. And for borrowers under 30, the average monthly loan payment is $351, according to Student Loan Hero. That is already 7% of their monthly debt obligations based on the median income. So getting this number down by consolidating is a key step.Consolidating loans brings defaulted payments up to date. Given the borrower’s student loans will now be combined into one, the new loan will be up to date. After satisfying defaulted student loans borrowers are now able to borrower again according to Fannie/Freddie guidelines.Average score increase is 75 points. Due to contributing factors such as bringing payments up to date and consolidating student loans, the average credit score increase is 75 points. This will not only help with overall approvals but can help improve rates as well.

Lastly, loan forgiveness programs are also available for borrowers in public service. (i.e. Teachers, Police Officers, Postal Service, Military etc.).Given that burdening student debt is a crisis that will seemingly continue, arming yourself with the right tools and knowledge is important. If you have any questions or need assistance with student loan debt please feel free to contact us at CAG Credit Services.

Have a question about student debt? Feel free to contact Alan Hayon at 800-965-6405. Alan Hayon is a FICO® Professional who and has been helping Loan Originators and borrowers improve their credit since 2011. Prior to moving into credit repair, Alan Hayon was also a Loan Originator since 2001 giving him a unique expertise in credit repair as it relates to mortgage lending.

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