b'|FINANCESlikely to saddle indebted borrowers for decadesavailable for the highly educated and indebtedments. The loan balance and repayment term and can become a major hurdle in qualifyingnursing practitioner?are often extended beyond what they would for a home loan. be if the borrower had a strategy of aggressive A DIFFERENT APPROACHSPECIALIZEDself-repayment.HOW STUDENT LOANS JEOPARDIZEMORTGAGES FOR PROFESSIONALS There is an important caveat: dont assume MORTGAGE APPLICATIONS There are alternatives. One that is growingthat PSLF is the answer. Government sta-Much of the rapid expansion in student loanin acceptance is a creative home loan programtistics reveal that only few have qualified to indebtedness followed the 2008 to 2010 mort- designed for professionals. This program wastake advantage. In September 2018, the U.S. gage meltdown, as did record conservativeinitiated several years ago for physicians andDepartment of Education reported that a mea-mortgage credit and underwriting standards.dentistsspecialized loans that allowed doc- ger 96 applications had been approved for This combination of highly leveraged borrow- tors to either exclude student loan debts fromPSLF, and that 99 percent of the applicants ers and constricted mortgage availability hasconsideration or qualify based on income- were rejecteda startling figure when consid-created a significant challenge for many in thedriven repayments. Some in the mortgageering that the applications totaled 33,300. It is nursing field to qualify for a home loan. industry found default rates were so low whennot feasible to project what this troubling sta-Relying on deferment, forbearance orlending to doctors that they allowed them totistic means for the thousands of profession-income-driven repayment programs to copequalify without counting their student loansals hoping to quality for PSLF, but its obvious with indebtedness helps borrowers stay cur- into the debt-to-income ratio calculation. at this point that student loan indebtedness rent with minimum student loan payments.The program has worked so well that simi- is going to be a limiting factor for longer than Unfortunately, those options become hin- lar underwriting guidelines are being appliedmany borrowers had anticipated.drances when attempting to qualify for hometo nursing professionalsgood news that will loans. Most conventional and governmentsurely help ease the financial burden associ- HOW TO FIND THE RIGHT HOME LOANSloans like FHA, VA, and USDA, will not rec- ated with federal student loans. Why? BecauseAt least nursing practitioners who have high ognize any form of deferral or forbearance inmortgage lenders have determined that home- levels of student indebtedness or complicated student loans. owners in these professional fields are excellentnon-employee (W-2) income structures can Mortgage credit guidelines require under- credit risks. As a result, lenders have begun torest a little easier knowing there is a new breed writers to qualify a home buyer at a fully amor- loosen underwriting guidelines specificallyof home loans specifically designed for profes-tized payment. Another option is default toaround student loans and self-employmentsionals. Qualifying is obviously not guaran-a percentage of the outstanding student loanhistory. Other professionals taking advantageteed, but lenders are recognizing the benefits balance for estimating monthly payments.of these programs include certified registeredof this approach to help ease the burden of fed-However, a fully amortized payment in thesenurse anesthetists, physician assistants, phar- eral student loans to help enable mortgage loan cases generally amounts to more than themacists, certified public accountants and (thisapproval. borrower can handle, meaning the qualify- last one should come as no surprise) lawyers. Seeking these specialized loan programs ing debt-to-income ratio has unacceptablyTo understand why more liberal underwrit- may not be easy. Some local banks or credit exceeded underwriting limits. This realitying guidelines for nursing and other profes- unions may not know about them or are wary makes it impossible for many borrowers tosionals have become an alternative, considerof facilitating them. The best way to learn more qualify for traditional mortgage financing. the unusually high numbers of medical pro- about these programs is to search online for For example, an applicant with a monthlyfessionals applying for Public Service Loanprofessional home loans for nurses, check income of $7,000 would be limited to onlyForgiveness (PSLF). PSLF, created in 2007, for- with colleagues, examine professional online $3,000 or 43 percent credit indebtedness,gives the remaining balance on your federalforums and consider contacting physician which includes student loans, mortgage, andDirect Loans after you make 120 qualifyinghome loan banks that might extend their pro-credit cards. As an example, consider a bor- monthly payments under a qualifying repay- gram to nurse practitioners. These programs rower with $50,000 in student debt that isment plan while working full-time for a qual- can help ease the burden for those who dream deferred or income driven. The payment willifying public service employer, as explainedof affordable home ownership despite their typically be in the 11.5 percent per monthby the governments Consumer Financialstudent loan debts. nrange, adding another $500 to $750 per monthProtection Bureau. The term public service to the qualifying debt-to-income ratio. Inemployer includes public hospitals and non- Josh Mettle is an industry-leading author and many instances, adding the fully amortizingprofit corporations. mortgage lender, specializing in financing phy-payment or percentage of outstanding bal- All of those payments can be reduced insicians, dentists, CRNA, and other nurse pro-ance payment to the overall debt-to-incomeone of the qualifying income-based repay- fessionals with highly specialized professional ratio will disqualify the indebted borrowerment programs. For nursing professionals inloan programs.Based in Salt Lake City, Utah, from qualifying for a mortgage loananotherpublic service thinking of eventually quali- Josh is area manager for Fairway Independent unwanted consequence of student loans. fying for PSLF, the object is to pay as little asMortgage Corporation. Email: josh.mettle@What can be done? Are there solutionspossible in each of those 120 qualifying pay- fairwaymc.com.www.elitecme.com |2019| SELF CARE 21'