Month: April 2017

Mortgage Solutions For Borrowers With Student Loan Debt

Solutions For Those With Student Loan Debt:

Earlier today the mortgage giant Fannie Mae, which is currently run by the government, announced some various solutions for those that have excessive student loan debt tied to their credit profile. The mortgage solutions for borrowers with student loan debt is welcome by some and not welcome by others.  The side that welcomes the new Fannie Mae mortgage solutionsinitiatives say this will provide better home ownership opportunities to many communities across America.  Those on the side that think this is bad move say these are not real solutions and will put more American’s at greater risk (due to the structure of the mortgage solutions put forth by Fannie Mae).

Previous Problems:

The problem for many potential homeowners or potential homeowners over the last 5 years is the amount of student loan debt their children have taken on and they co-signed for.  Under the current rules a mortgage company must include the payment’s amount in the debt to income calculations even if the child is paying back the loan.  Since technically they, the parents, are also responsible mortgage lenders include the debt payment amounts into the debt to income calculation.

Relief For Parents:Home Brown

Fannie Mae’s mortgage solution for borrower’s with student loan debt now allows a mortgage company to ignore student loan debt where the child is the primary borrower. Also in this are car loans and credit cards that parents co-sign for their children. Obviously the borrower has to prove they’re not the primary borrower for the accounts, before a lender will exclude them from the debt to income calculations.  As you can see these new mortgage solutions can present a major problem for banks when the economy slows because if the child can’t pay back the student loan it falls onto the parent. It’s understandable that Fannie Mae wants to open the door for the purchase of a new home or the refinance of a current mortgage but the question is; Does the solution put significant risk back into the mortgage lending business?

JB Mortgage Capital, Inc.:

If you’re considering a refinance of your current mortgage or looking to purchase a home please be A+ Ratingsure to give us a call 1-800-550-5538. We’ll provide a no-cost/no-obligation quote on one of our many loan programs. We offer industry low mortgage rates, the latest technology to ensure a fast closing and personal one-on-one service.

Per Fannie Mae:

“Innovative Solutions for Making Homeownership Affordable for Borrowers with Student Loan Debt
Because there is rarely a “one size fits all” approach to this issue, the policies announced today provide options to borrowers based on their individual circumstances:

  • Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high interest rate student debt while potentiallyLow Mortgage Rates At JBMC refinancing to a lower mortgage interest rate.
  • Debt Paid by Others: Widens borrower eligibility to qualify for a home loan by excluding from the borrower’s debt-to-income ratio non-mortgage debt, such as credit cards, auto loans, and student loans, paid by someone else.
  • Student Debt Payment Calculation: Makes it more likely for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports.”

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Will A Government Shut Down Affect Mortgages?

Remember The Last Time This Happened:

It’s April 2017 (2019 Shutdown info below) we’re starting to hear “rumbles” that the government may face another shut down this summer. Anyone remember what happened last time the government shut down? Nearly 800,000 federal employees were put on leave without pay, and another million or so had their paychecks delayed. HouseNational parks, and NASA shut down while politicians went on TV blaming other politicians. The government paid it’s bills on the national debt and social security along with maintaining funding for the military. Mortgages were delayed due to the fact that lenders required income to be verified with the IRS; so since the IRS was not able to process these requests any mortgage in process because of the government shut down was put on hold. Thankfully it was a short shut down however it ended up costing the federal government nearly $25 billion….ouch! Mortgage rates came under pressure and continued to rise even after the government moved past the shut down.

Gridlock In Washington:

As we move further into the Trump Presidency it’s becoming clear that gridlock in Washington DC is alive and well.  So the idea that we may face another shut down is very real. California home loan rates may go up again.  Mortgage lenders may even curtail loan volume due to the uncertainty we would face as a country and how long it will last. Millions of people will be affected and those that work for the federal government and live pay check to pay check will come under enormous strain. However this time we may not see the same delays in the mortgage industry as we did last time. This is all thanks to Day 1 Certainty from Fannie Mae. As mentioned in a previousday 1 certainty post; this program allows for less documentation for some qualified borrowers and that means those that qualify do not have to have their income verified with the IRS.  So this is great news for mortgages however not all borrower’s will qualify for income verification exemption.  Hopefully we will avoid this and the federal government will find away to come together to work out their difference and keep the government funded.

Be sure to connect with Loan Officer Kevin O’Connor on Twitter: @Rates01

Fast Forward to 2019:

So it’s 2019 and the government has been “shutdown”. In these first few weeks there has been no negative side affects to mortgage applications, mortgage processing nor mortgage rates. However that could change if JB Mortgage Capital, Inc.this drags on for months. Both sides blame the other side and seem to be un-willing to comprise on some very important issues. For further information about the 2019 shutdown visit our article that came out in early January.

JB Mortgage Capital, Inc.:

If you are considering a refinance of your current mortgage or you’re looking to purchase a home please be sure to contact us for a no-cost/no-obligation quote. Loan Officer Kevin O’Connor has over 14 years of experience and we offer industry low rates. We use the latest technology to ensure your loan closes fast and we provide a unique one-on-oner personal experience. Contact us today to see how we’re different: 1-800-550-5538.