On Freddie Mac’s home page, you will see the tag line “We Make Home Possible”, when I see changes in the guidelines as outlined on Selling Update 2018-13 I appreciate the effort to make the mortgage process easier on borrowers and live up to their tagline.
Let’s face it, many younger borrowers are stuck between a rock and a hard place when it comes to debt payments. On one hand they don’t qualify for a mortgage payment due to DTI issues, for many younger buyers student loans do take up quite a bit of buying borrower. On the other hand, they must rent apartments or homes that probably have the exact same payment as the mortgage would have been for a similar home in the same area. So bottom line they are probably going to end up with the same payment for “housing” without all the benefits of home ownership! As a parent of two great kids in their 20’s, I see this challenge first hand. So Kudo’s to Freddie Mac for this change in the guidelines!
According to Selling Update 2018-13 , you have a new (and in my opinion better) option for debt calculations on student loans (with settlement dates after Nov 1 2018).
Some quick examples:
|Previous Requirements||New Requirements|
|$45,000 Student Loan||$45,000 Student Loan|
|$150 payment on credit||$150 payment on credit|
|$225 is 0.5% of loan balance||N/A – can now use credit payment, not 0.5%|
|$225 payment to qualify borrower||$150 payment to qualify borrower|
That is all for this week’s blog, are you a mortgage professional that wants to make sure you are on top of your game. Knowing little nuggets like this can make all the difference in your career as a loan officer, processor, underwriter, or auditor. Just like the old “school house rock” videos “Knowledge is Power”!
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Until next time!