[It’s graduation time around the USA. New college grads have a lot to think about with respect to housing…Russell provides more food for thought here! Young adults need to be able to repay their loans so that they can join us as real estate investors and make their money work for them.]
Austin is still the number one place in the country to move to. There are so many reasons why, but with the lack of affordable housing options in Austin, millennials are expected to have to save for almost 10 years before they’re able to purchase a home.
Home Prices in April 2017
In the Austin-Round Rock MSA, median sales price for single-family homes was $305,000. In Austin (in Travis County), the median price was $370,600 during the same time period. Home prices remain more affordable in the surrounding Hays and Williamson counties, but their home prices are also rising the fastest. Hays County’s median home price was $267,500, while Williamson County’s was $275,000.
The lack of supply is one of the main reasons residential real estate is skyrocketing. The Austin monthly housing inventory was two months as of March, whereas the Real Estate Center at Texas A&M University estimates a six-and-a-half month level is needed for a balanced housing market.
Millennials, including those recent graduates, make up more than one-third of Austin’s population. They are looking for attractive, smaller homes close to amenities and major thoroughfares. But it’s increasingly difficult to find areas where that type of home can be built. In addition to the fact that they’re just starting their careers, estimates claim that today’s college graduates average around $37,172 in student debt. According to the National Association of Realtor’s Aspiring Home Buyers 2017 profile, 59 percent of non-homeowners do not feel comfortable taking on a mortgage when they have student loan debt.
Student Loan Changes
There is some good news out there, though. Fannie Mae has announced changes to how they treat student loan debt, which can make the difference in qualifying for a home mortgage. For the 5 million borrowers who participate in the reduced payment plans, actual payments are considered for calculating debt-to-income ratio rather than maximum payment amount. The noted changes could make it possible for would-be buyers with student loan debt to buy a home now and not have to wait for many years.
Not to be included in the debt-to-income (DTI) ratio is non-mortgage debts being paid by another party for at least 12 months. An example would be payments made on student loan debt by parents. These payments would not be counted as DTI ratio for the student.
Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high interest rate student debt while potentially refinancing to a lower mortgage interest rate.
Debt Paid by Others: Widens borrower eligibility to qualify for a home loan by excluding from the borrower’s debt-to-income ratio non-mortgage debt, such as credit cards, auto loans, and student loans, paid by someone else.
Student Debt Payment Calculation: Makes it more likely for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports.
– See more at: http://www.fanniemae.com/portal/media/financial-news/2017/student-loan-debt-6546.html
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