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How the Restart of Federal Student Loan Payments Affects Mortgage Approval: A Comprehensive Guide By Raleigh Mortgage Broker Logan Martini

August 17, 2023 by Kevin Martini

In March 2020, following the COVID-19 outbreak, federal student loan payments and interest accruals were suspended. This was a lifesaver for many facing unemployment, wage cuts, or other pandemic-induced financial issues. However, as of June 2023, the federal decree affirms that this pause will cease. Consequently, borrowers must brace for payments starting October 1, 2023.

For many prospective homebuyers, this resumption might influence the chances of securing a mortgage due to potential hikes in monthly payments and renewed interest accumulation.

Raleigh Mortgage Broker Logan Martini shares, “It is important for people that have federal student loans to start planning for the repayment of their student loans now. By preparing, they can avoid late payments and interest charges and get on track to repay their debt.”

Federal Student Loan Resumption: What You Should Note

  • Payments will resume on October 1, 2023. This means you must make your first payment on or before that date.
  • Interest will resume on September 1, 2023. This means that even if you don’t pay in October, you will still accrue interest on your loan balance.
  • You will have a 12-month “on-ramp” period. This means you will not be penalized for late payments during the first 12 months of repayment.
  • You can still make payments while the payment pause is in effect. This can reduce the amount of interest you accrue.
  • Consider enrolling in an income-driven repayment plan. These plans cap your monthly payment at a percentage of your income.
  • You can also consider consolidating your loans. This simplifies your repayment and lowers your monthly payment.

Federal Student Loan Payments and Mortgage Eligibility: The Link

Credit reports showed a $0 monthly obligation towards federal student loans during the hiatus. However, entities like FHA, Fannie Mae, and Freddie Mac employed their mechanisms to project prospective payments, crucial for computing the Debt-To-Income (DTI) ratio – an essential mortgage approval metric.

While the pause showed $0 liabilities, FHA and Freddie Mac utilized 0.5% of the total loan balance as the payable amount, and Fannie Mae used 1%. Come October 1; these estimated amounts might differ from actual repayments. Higher-than-estimated figures could unfavorably tilt your DTI, jeopardizing mortgage sanctions.

The Role of Income-Driven Repayment Plans in Mortgage Approval

Income-driven repayment plans, exclusive to federal student loans, determine your monthly dues based on your discretionary income (income post necessary expenses). There are four primary IDR plans:

  1. Pay As You Earn (PAYE): You pay 10% of discretionary income.
  2. Repayment Income-Contingent (REPAYE): 10% of discretionary income, potentially less with dependents or if your spouse has student loans.
  3. Income-Based Repayment (IBR): Your monthly payment is 15% of discretionary income.
  4. Income-Contingent Repayment (ICR): Your monthly payment is 20% of discretionary income.

Under Fannie Mae, if an IDR pegs your monthly payment as $0, it won’t influence your DTI. However, this doesn’t apply to FHA or Freddie Mac.

Final Thoughts from Martini Mortgage Group

Proactively preparing for the reinstatement of federal student loan repayments is crucial. Nevertheless, you should still be able to maintain your homeownership aspirations.

Understanding your financial position is pivotal whether you’re a homeowner or planning to be one. Knowledge isn’t just power – it provides clarity, confidence, and direction.

Should you seek insights on ideal mortgage strategies amidst the federal student loan resumption, don’t hesitate to reach out. Whether diving into homeownership or just gauging available avenues, we aim to guide you toward an optimal choice tailored to your circumstances.

raleigh mortgage broker logan martini

Logan Martini | NMLS 1591485 | Senior Mortgage Strategist | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

Filed Under: Conventional Loan, Debt-To-Income (DTI) Ratio, Fannie Mae, Federal Student Loan, FHA Home Loan, Freddie Mac, Logan Martini Tagged With: 2023 Student Loan Resumption, and Freddie Mac, Debt-To-Income (DTI) Ratio, Fannie Mae, Federal Student Loan, FHA, Income-Driven Repayment Plans (IDR), Logan Martini, Raleigh, Raleigh Mortgage Broker

2022 Interim Conforming Loan Amounts

September 13, 2022 by Kevin Martini

Raleigh mortgage lender and Certified Mortgage Advisor Kevin Martini announced on September 12, 2022, the Martini Mortgage Group at Gold Star Financial will be offering an interim increased conforming loan limits for the balance of 2022. The new 2022 interim conforming loan limit for one-unit properties (and higher for more units) is going to be $715,000 with the Martini Mortgage Group, an increase of $67,800 from $647,200 from earlier in 2022.

interim 2022 conforming loan limits for raleigh north carolina

What is a Conforming Loan?

A conforming loan, also referred to as a ‘conventional’ or ‘agency’ loan, is any mortgage that meets the Fannie Mae or Freddie Mac guidelines. Fannie Mae and Fredie Mac are government-sponsored entities (a.k.a. GSE). In other words, a conforming loan ‘conforms’ to the asset, credit and income guidelines set forth by Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) sets the conforming loan limit based on the FHFA House Price Index (HPI) for the third quarter of the year which covers the last four quarters.

Why the Martini Mortgage Group is offering a 2022 Interim Conforming Loan Amount

The Martini Mortgage Group at Gold Star Financial projects that the 2023 Conforming Loan Limits will increase to $715,000 for one-unit properties (and higher for more units) to adjust for surge in the average U.S. home prices.

I say ‘projected’ because the official number has not been released however we at the Martini Mortgage Group support the projected number ahead of the Federal Housing Finance Agency official announcement that should be released later this fall to help the families we serve today.

Logan Martini

Higher Conforming Loan Limits benefit homebuyers and homeowners

For homebuyers, there is a true cost of waiting to buy a home. During the past year, home prices have risen by approximately 15%+ in many markets. This means it takes $575,000 to purchase a home that you could have purchased a year ago for $500,000. While 15%+ annual increases in home prices are unlikely, a more reasonable scenario is that home prices may rise by 5%+ in the coming year. That’s because supply is likely to remain low and demand is likely to remain high. If home prices only go up by 5%, you may lose another $30,000 – $60,000 if you wait, depending on your price range.

For homeowners, the higher conforming loan limits means a homeowner can access more of their ‘tappable equity’. Tappable equity is defined as how much equity homeowners have available to access while retaining at least 20% equity in their homes. In other words, it’s how much equity you’d have available to tap into if you borrowed up to 80% of your home value.

How can you benefit from the new higher Interim Conforming Loan Limits offered by the Martini Mortgage Group?

Buying a home as a first-time home buyer or as a repeat homebuyer is a process not an event. It is also a process for a current homeowner that wants to access their earned tappable equity. The process start with a conversation with either Logan Martini or Kevin Martini with the Martini Mortgage Group. Let’s chat to discuss the process and allow us to provide you not just with price and cost clarity but also, certainty.

logan martini raleigh mortgage lender with martini mortgage group 2

Logan Martini

NMLS 1591485 | Senior Mortgage Strategist | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

Kevin Martini

NMLS 143962 | Certified Mortgage Advisor | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

kevin martini best raleigh mortgage broker

Filed Under: Agency Loan, Buy a Home, Conforming Loan, Conforming Loan Limits, Conventional Loan, Fannie Mae, Freddie Mac, Home Loans, Kevin Martini, Loan Limits, Logan Martini, Mortgage, Raleigh, Real Estate, Refinance Tagged With: 2022 Conforming Loan Limits, Buying a Home in North Carolina, Buying a Home in Raleigh, Fannie Mae, Freddie Mac, Kevin Martini, Mortgage Tips, North Carolina, Raleigh, Raleigh Mortgage Broker, Raleigh Mortgage Lender, Real Estate

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    Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | For licensing information go to: www.nmlsConsumerAccess.org and/or www.GoldStarFinancial.com Please review our Disclosures & Licensing information | Gold Star Mortgage Financial Group Corporation has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency. Equal Housing Lender. For further information about Gold Star Mortgage Financial Group, Corporation, please visit our website at www.GoldStarFinancial.com. Receipt of application does not represent an approval for financing or interest rate guarantee. Applicant subject to credit, acceptable appraisal, title, and underwriting approval. Not all applicants will be approved. Other terms and conditions apply. Contact Gold Star Mortgage Financial Group, Corporation for more information and up-to-date rates.

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