True Stories: Hybrid, eNote and RON Implementation

Join expert panelists that will discuss the status of federal legislation, trends in digital adoption and how best to prepare your organization for the next generation of lending processes.

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Real Estate

Yes, college grads more likely to buy a home… but

Fannie Mae finds student debt delays it

Graduating from college is one of the most satisfying feelings there is, and upon finishing, one’s earning potential increases tremendously, but it comes at a price.

Total student loan debt more than tripled over the last 10 years, with a serious delinquency rate, at least 90 days late, surpassing any other type of debt, according to Fannie Mae.

This student debt is shown to have an effect not only on if former students buy a home, but when they buy it, according to data from Fannie Mae’s National Housing Survey.

While student debt does cast its shadow on homeownership rates, Fannie Mae’s data shows that the benefit of a college degree outweighs the burden that student loan debt places on homeownership likelihood.

On the other hand, high school graduates fare better than those who accumulated student loan debt and didn’t graduate.

As could be expected, those with a bachelor’s degree and no student loan debt are the most likely homeowners. They are 43% more likely to buy a home than high school graduates who never attended college and have no student loan debt.

When student debt comes into play, however, that rate drops. College graduates with student debt are still 27% more likely to buy a home than high school graduates.

Those who attend college and wrack up student debt without graduating, however, fare the worst as they are actually 32% less likely to buy a home than high school graduates.

Unfortunately, this group makes up 40% of Americans aged 25 to 44.

Although having a college degree makes one more likely to buy a home in the future, it can also push these potential borrowers to delay homeownership.

Renters with student loans are 28% less likely to say they will buy, rather than rent, their next home than those without student loans, when controlling for differences in age, income and marital status.

In the long term, however, those with student loans are only 7% less likely than those without student loans to say they plan to buy a home eventually.

A survey for the first half of 2016 by the National Association of Realtors showed about 50% of Millennials, and about 66% of Millennial non-homeowners who have student debt, are uncomfortable taking on a mortgage. What’s more, this group was less likely to believe they could even qualify for a mortgage.

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