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).

FHLMC student loan

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”!

Join the 10 Point Underwriting Process training program we offer, and you will receive 30+ videos on each step of the approval process, access to monthly training programs, and a transcript will be maintained on all your training completed.  Our training is only $395 per year per person.  We set this low barrier pricing because we believe education is what will transform your career.

Until next time!