Millenial Headaches - One More Obstacle to Homeownership

Written by Posted On Wednesday, 24 August 2016 12:15
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As millennials enter a job market decimated by outsourcing, automation and stagnant wages, they now have a new impediment to buying a first home. This summer, FHA loans, which are the number one way first time homebuyers purchase homes, made a significant change to its qualifying standards. The target? Student loans! Previously, buyers' debt ratios would not include student loans that were in deferment, forebearance or in an income based repayment plan. The new rules now require that ALL FHA borrowers with outstanding student loans must have one percent of the student loan balance calculated into their debt/ratio analysis regardless of deferment, forebearance or reduced payments due to income. An example:  A student graduates from college with a four year degree. Average student loan balances are $$30,000-$40,000 with some as high as $100,000 or more! Imputing a one percent payment obligation immediately creates a long term monthly debt burden of between $300-$1,000! Effectively the equivalent of a car or small house payment. Considering there is currently 1.2 trillion dollars in outstanding student loan debt, this change will serve as a catalyst to push more millennials out of the new home market for years to come! Never wanting to end on a negative note, a solution should be in the works. Homeownership remains the foundation of the American dream. The return to a growing, vibrant economy would lift all workers and entrepreneurs to new levels of financial success and should make this new rule less relevant. Potential solutions to be addressed in the next post.  Stay Tuned!

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Dan Wolk

Dan began his career in 1986 as one of the pioneers in the discount real estate business model in Central Florida and was one of the top ten real estate agents nationally within the Help-U-Sell Real Estate franchise for four years running. The winning combination of providing top level service with a variable commission structure designed to SAVE consumers thousands of dollars has made him a perennial "thorn in the side" of the big real estate franchise agents for decades! Over the years, Dan developed his own brand of discount real estate that still provides a "sellers choice" commission structure, while also focusing on superior customer service. Since 1986, Dan has added Real Estate Broker, Licensed Real Estate Instructor, Licensed Title Agent and and MBA to his resume, giving him a unique edge other agents simply don't possess. This arsenal of knowledge combined with unparalled problem-solving skills have made the difference for thousands of buyers and sellers for almost 30 years!

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