Stearns Lending Offers Customized Home Loans to Help Buyers With Student Loan Debt Finance a Home Purchase

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Americans owe over $1.56 trillion in student loan debt, which equates to an individual debt of approximately $34,899 per person for the 44.7 million borrowers, and an average monthly student loan payment (among those not in deferment) of $393.00, according to data from the U.S. Federal Reserve and the Federal Reserve Bank of New York. Stearns Lending has recognized the crippling impact that student debt can have on a person’s ability to purchase a home, so the company has developed several home loan programs specifically to help people purchase their first home, while other programs can help pay off outstanding student loan debt sooner.

“Stearns Lending recognizes the crippling impact that student debt can have on a person’s ability to purchase a home,” said Jim Linnane, EVP Retail Lending President, Stearns Lending. “Stearns developed home loan programs specifically to help people with student debt purchase their first home.”

Americans owe over $1.56 trillion in student loan debt, which equates to an individual debt of approximately $34,899 per person for the 44.7 million borrowers, and an average monthly student loan payment (among those not in deferment) of $393.00, according to data from the U.S. Federal Reserve and the Federal Reserve Bank of New York.

College graduates are not the only ones whose financial capacity to qualify for home financing is hampered by student loan debt. Among the Class of 2018, of the 69% of college students took out student loans, graduating with an average debt of $29,800, 14% of their parents took out an average of $35,600 in federal Parent PLUS loans, according to data compiled by Student Loan Hero.

With such high amounts of student loan debt, borrowers of all ages may find it hard to qualify for a mortgage loan under the guidelines set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) who back the majority of U.S. mortgages.

“Stearns Lending recognizes the crippling impact that student debt can have on a person’s ability to purchase a home,” said Jim Linnane, EVP Retail Lending President, Stearns Lending. “Stearns developed several home loan programs specifically to help people with student debt purchase their first home, while other programs can help pay off outstanding student loan debt sooner.”

Ease Into Your Mortgage Payments

Homebuyers can receive two years to ease into their mortgage payments with a lender-paid buy-down program from Stearns Lending. The first year of the Smart Start program reduces loan interest paid by the borrower by 1.5%. For example, if the interest rate is 4%, the homeowner would be responsible for paying 2.5% interest on their home loan for the first year. Interest is reduced by 0.5% in the second year, so using the same example, the borrower would be responsible for paying 3.5% interest on their loan. The interest rate returns to normal on the third and subsequent years.

Pay No Mortgage Insurance

Homebuyers who do not want to pay mortgage insurance on their home loan can apply for a Seller-Paid Buy Down Loan program with Lender-Paid Mortgage Insurance (LPMI) where Stearns Lending will pay the mortgage insurance for the life of the loan. Homeowners with student debt can use the money they’ve saved by not paying mortgage insurance to pay for their student loan, or to make additional payments on the principal to pay off the loan sooner.

Doctor Mortgage Program

Getting loans with favorable terms can be difficult for medical school graduates with a large debt load. The Association of American Medical Colleges reports that the average medical school debt balance for graduating students in 2018 was $196,520. Add that burden to their estimated undergraduate balance of around $25,000 and the total average student loan balance for a doctor is $221,500.

Normally in a home loan application, any debt would be included in the bank’s calculations. However, with the Freddie Mac Doctor Waiver program offered by Stearns Lending, the student loans of MDs and dentists who have completed their contract will be excluded when calculating an applicant’s debt-to-income (DTI. This can boost the borrower’s buying power, and their monthly loan payments may be lower.

Roll Student Loans Debt Into A Mortgage Loan

For existing homeowners, Stearns Lending offers the ability to roll the balance on their outstanding student loans into a home refinance. The homeowners will pay off their student loan with a cash-out refinance and benefit from paying off the rolled over amount with the lowest possible rate available at the time. Consolidating both loans will give the homeowner one less bill to pay each month.

Stearns Lending, LLC is licensed to originate home loans in 49 U.S. states (excluding New York), including District of Columbia, and with over 90 branches across Alaska, Arizona, California, Georgia, Hawaii, Iowa, Idaho, Illinois, Minnesota, Missouri, North Carolina, New Hampshire, New Jersey, New Mexica, Nevada, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia, Washington and Wisconsin. Homebuyers and homeowners can find a Stearns Lending mortgage loan originator at Stearns.com to discuss their home loan options.

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Diana Mulhall
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