$75,000 yearly income, potential mortgage $1,610 per month, $1,350 in student loan payments, $440 car payment and $120 in installment and credit card debts.
Mary was referred by a bank that couldn’t do her loan and the Realtor that was representing her in the purchase of a home. Both asked me to see if there was a way to get her a mortgage.
When I met with her, one of the things we discussed was her student loans and the amount of her debt and how many years it would take to pay off the obligation. Her next statement was something I keep hearing over and over again. If I had to do it all over again, I would never have gone to the college I went to and would have gone to a community college and gotten my education.
Mary still owes $71,000. Her grandmother was giving her $80,000 which was going to be her inheritance and could be used as a down payment for the purchase of a home and in this case a $350,000 purchase.
Here is what I proposed to Mary, would your grandmother consider paying off your student loans? She wasn’t sure, so she proposed it and after a couple days, she came back with an OK. She also agreed to give Mary $15,000 towards her down payment.
The transaction was revised as a purchase of $355,000 and the seller paying $5,000 toward closing costs. Mary put 5% down taking the balance from a retirement account and has a mortgage payment of $2209. All these changes, her new debt ratio was under 45% and now can get her mortgage.
Mary was fortunate to have a very generous family, but not everyone is that fortunate and continue to struggle with huge amounts of student loan debt.
