Young adults coming of age in America since the financial crisis have had to battle increasingly higher college tuition and fees at the same time that many of their parents were trying to recover financially. The result is a national student loan debt level that has never been higher — reaching $1.4 trillion in the first quarter of 2019, according to Experian.
That national debt level breaks down to about $35,359 in student loan debt per borrower on average, a 26% increase in the last five years. Far from being a problem just for Millennials or first-time homebuyers, Experian reports that student loan debt taken on by those in their 50s, 60s and 70s on behalf of their children has spiked in the last year, with the number of student loan borrowers age 62 and older rising 17% in 2019, and those between 50 and 61 rising 10%.
With more student 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. However, the GSEs have recognized the effect of rising student loans in the last few years and have restructured some of their requirements, including the debt-to-income ratio they allow and the amount of the conforming loan limit.
That’s good news for potential homebuyers who have been sidelined by student debt, but only if they can access loan products that work well for their particular circumstances. Otherwise, they may run into the frustrating cycle of finding their dream home, but being shut out of the opportunity when they can’t get the financing they need.
Fortunately, independent mortgage brokers have access to hundreds of loan products offered by a slew of wholesale lenders, and the expertise to match buyers with the customized loans that could be right for them. Unlike big banks or online mega retail lenders, independent mortgage brokers specialize exclusively in home loans and have a multitude of options at their disposal. They also have access to wholesale rates, which often translates to lower monthly payments and more house for a borrower’s money.
Student loan debt doesn’t have to disqualify an otherwise worthy borrower. And partnering with a local mortgage broker who can help is easy – real estate professionals and homebuyers can locate one in their community and find home-buying tips and tools, including mortgage calculators at FindAMortgageBroker.com.