With graduations upon us, graduates past and present are reminded of the price of their education. According to the U.S. Federal Reserve, in 2021 44.7 million Americans have student loan debt and in Maryland, the average balance is $36,689. Many potential homebuyers think with a mound of student debt it will be nearly impossible to purchase a new home. Luckily, there are options for those with debt to buy homes. The Maryland Mortgage Program offers the SmartBuy 3.0 program, which helps to qualify homebuyers to pay off student debt during the purchase of their home.
The terms are simple.
You must have minimum existing student debt of $1,000 and the loan must be in your name. The program offers up to 15% of the home purchase price with a maximum of $30,000 in financing to be used towards paying off your debt. The full, outstanding balance of the student loan must be paid off as part of closing; partial loan payment is not permitted. The student loan may be in repayment or deferred status.
Financing for student loan relief will be in the form of a 0% interest, deferred loan with no monthly payments. The loan is forgivable over 5 years; this means if you live in your home for 5 years, your debt is forgiven, and repayment is not needed! If you choose to sell or refinance the property within 5 years, the remainder of the student debt loan will be due upon the sale of your home.
This is a great program to utilize if you are a first-time homebuyer and have accrued student loans over the past few years. Contact one of our loan officers today to see if you qualify!
*Student debt information pulled from Student Loan Hero: https://studentloanhero.com/student-loan-debt-statistics/#:~:text=44.7%20million%20Americans%20with%20student%20loan%20debt