You may think the following is a strange topic for the Real Estate Corner, but Student loans are a huge obstacle to people wanting to buy a home. Here are some tips.

Student Loans: How Much to Borrow?
by Farnoosh Torabi on 12/06/2010

My recent post on student loan bankruptcy continues to evoke comments from numerous borrowers fighting to make ends meet. Sophia Vackimes writes in that her $250,000 student loan is proving difficult to manage in a stagnant job market, even with her Ph.D. Another reader, Mike, responds that he has more than $80,000 in debt, while earning $30,000 a year.

Those loan figures are above average, but not uncommon in a time where college costs have practically tripled since the 1980s (inflation-adjusted). According to a new report by Pew Research, students who graduated with a bachelor's degree in 2008 borrowed roughly $15,000 (adjusted for inflation), which is a far cry from the numbers above, but still 50 percent more money than what graduating students borrowed in 1996.

What lender in its right mind gives a teenager (figuring you're 18 or 19 when you assume student loans) up to hundreds of thousands of dollars in student loans? And what borrower in his or her right mind accepts?

While we can't exactly control lenders' decisions, we can control what we, as borrowers take on. Just like you wouldn't (or shouldn't) accept a $500,000 mortgage if you're only making $50,000 a year (though banks granted those types of mortgages a few years ago), students should not take on more than they can feasibly carry. The average graduating salary offer for a bachelor's degree student is $47,673, according to NACE's Salary Survey.

For aspiring college students weighing their financing options, consider the following ballpark math for a manageable amount of student loan debt. Consider federal loans first, private loans never.

1. Consider your first year salary. Figure you'll make the average $47,673 the first year you graduate. That's close to $36,000 after taxes, assuming a 25% tax bracket.

2. Consider your budget. If your student loans were to make up 5% to 10% of your monthly budget, which is reasonable, considering you will have rent, car payments, some credit card debt, food and utilities, among other expenses, then you want a loan that requires a payment of no more than $360 a month - maximum. At the federal lending rate of 6.8% and a repayment term of 10 years, that's approximately $60,000 in student loans, which still even sounds a bit high to me. Yes, you will boost your earnings potential and can afford to pay more years down the line, but best to stay conservative here, since, again the banks certainly won't be. And not to be cynical, but who knows if you'll be able to get a job right away? It may take several months to land a job, as many current college graduates will tell you.

Bottom line: There are many ways to obtain an education in this country. Drowning in debt should not be one of them. Financial institutions won't likely tell you this. It's tough to accept the advice, since we all want to go to the best schools and get the best educations and that all comes at a price - far more than $60,000 - but like anything else in this world, if you can't afford it, figure out other ways to make it happen. In the financial world you often need to step in and be your own financial advocate. After all, no one cares more about your money than you.

my email address is george.margrave@migonline.com

What better gift could you give yourself than a new home?

What better gift could you give yourself than a new home? It may be one of the best times ever for that purchase. The rates are still really really great. You can probably find a home for 25-50% less than you could have 5 years ago.

The prices around the country seem to still be declining a little, but according to the local Realtors Association they have stabilized in middle Tennessee. In fact the median price is increasing.

Call me at 615-777-4663 and let's discuss your possibilities.

July 2, 2010

The Congress has passed the following:

Tax credit processing extension Updates

The Congress has passed H.R. 5623, the Homebuyer Assistance and Improvement Act, which extends the tax credit closing deadline until September 30th. There will also be no gap between June 30th and the date the President signs the bill into law. The extension only applies to transactions in which the purchase contract was signed by April 30th.

·Flood insurance extension

The Senate has passed H.R. 5569 which extends the National Flood Insurance Program until September 30, 2010. The bill is retroactive from June 1, 2010 to the date the President also signs this bill.

USDA

There is still no decision on the USDA extension. Since the Senate adjoined until July 12th, the House must decide whether to accept the supplemental appropriations bill passed by the Senate or it will be necessary to delay final action on the USDA extension until after the July 4th recess.

Potomac Partners

Friday 25,2010

It has always been important for our borrowers to make sure that their financial situation does not change while we process their loan. With new rules from Fannie Mae it is even more important. Now we have to make even more of an effort to insure this (even possibly a new credit report just before closing). The problems associated with new debt or possibly lower credit scores are too numerous to spell out here. Of course the worst thing that could happen is that suddenly the loan could not be negated. Talk about disruptions. Especially if there is more than one closing hanging in the balance. So I am asking everyone in the process to push for the result we all desire. An uneventful closing.

Friday, June 11, 2010

You know, I just received the latest stats on the mortgage licensing situation. Seventy one per cent of the people are now passing the National test. I don’t know about the state test but I thought it was harder. That means that there are going to be fewer competitors’ for me come July 30th. That is unless the banks hire all the people that fail. They can do that you know. Obviously I recommend that you deal with a licensed person who has done the training and has the scores to prove it. My license number is 185895. The web site is http://mortgage.nationwidelicensingsystem.org/ Check out the site and look me up.
On another note congress still has not funded the Rural housing program and the Flood insurance program. You might want to let them know what you think about that. Although the market is better, we don’t need these kinds of impediments.

As I write this I am in disbelief. I just cannot understand why congress has let the flood program expire again and has still not funded the Rural housing program. I encourage everyone to email their Senators and representatives. Their web sites will give you contact info.
Also Fannie Mae has imposed rules which will require Lenders to re pull credit before funding loans. So a lower credit score or increased debts can kill a transaction at the last minute. So all involved have to make sure our clients know the consequences of more debt or missed payments.
And lastly (this one is more positive), THDA has lowered interest rates. The Great Rate loan is 4.6% and the Great Start is 5.2% (this one provides a 4% grant). If you are not familiar with these call me at 777-HOME (4663) and I will show you how you can increase your sales.

FHA's 203H plan

We have recently received noticed that First Time Homebuyers whose rental residence was damaged by flood waters (restrictions apply) may now possibly buy a home through FHA's 203H plan. It would be combined with a THDA loan and the benefit to the buyer would be a 100% loan at a great interest rate. Today that would be 4.75%

Also I want to remind you that Veterans have until April 30, 2011 to qualify for the tax credit. So it isn't entirely gone.

Also Veterans can get a THDA loan without being a First Time Homebuyer (they would not get the tax credit though). The first time buyer requirement is currently waived by THDA.