Student Loan Payments Resume

In episode 188 of the Martini Mortgage Podcast, host Kevin Martini discusses the upcoming resumption of federal student loan payments on October 1, 2023, and its potential impact on mortgage approvals. He emphasizes the importance of understanding one's financial position and offers insights on navigating the changing landscape.

Main Topics:

Resumption of federal student loan payments on October 1, 2023.
How this might impact your mortgage approval.

Key Points:

Federal student loan payments and interest were suspended in March 2020 due to the COVID-19 pandemic.
As of June 2023, the pause is set to end, with payments resuming on October 1, 2023.
For homebuyers:
- The resumption may affect chances of mortgage approval due to increased monthly payments and interest accumulation.
Three things borrowers should know:
- Payments resume on October 1, 2023.
- Interest accrual starts on September 1, 2023.
- There’s a 12-month “on-ramp” period without penalties for late payments.
During the payment hiatus, credit reports showed $0 obligation for federal student loans. However:
- FHA and Freddie Mac estimated payments using 0.5% of the total loan balance.
- Fannie Mae used 1% for their estimations.
Estimated payment amounts might differ from the actual payments, which could affect the Debt-To-Income (DTI) ratio, a key metric for mortgage approvals.
Income-driven repayment plans for federal student loans:
- PAYE: 10% of discretionary income.
- REPAYE: 10% of discretionary income, possibly less with dependents/spouse with loans.
- IBR: 15% of discretionary income.
- ICR: 20% of discretionary income.
- Under Fannie Mae, if the approved payment is zero, it's used for DTI calculations.

Closing Thoughts:

Be proactive and prepare for student loan repayments.
Still, maintain homeownership aspirations.
Understand your financial position as knowledge provides clarity, confidence, and direction.
For insights on mortgage strategies amidst student loan resumption, contact Kevin Martini at 919.238.4934.

About Kevin Martini: Kevin focuses on empowering families to create generational wealth via real estate and the right mortgage strategy. He's originated over a billion dollars in home loans since 2006. Recognized as one of the top 50 Mortgage Originators in the U.S., Kevin has been featured in Forbes and CNET. He frequently shares insights at conferences and hosts the Martini Mortgage Podcast. He's dedicated to helping clients make smart financial decisions for wealth growth and future planning. Connect with him on Instagram and YouTube for real estate and mortgage insights.

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