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Mortgage Coach announced its partnership with LoanSense, an online student loan advisor that helps federal student loan holders enroll in affordable repayment and forgiveness plans. With the partnership, mortgage lenders are able to help homebuyers with high monthly federal student loan payments achieve better home financing outcomes by enrolling in federal student loan Income Driven Repayment plans and Public Service Loan Forgiveness.
Despite strong incomes and credit scores, many of the 42.9 million Americans with federal student loan debt are either denied home financing or have reduced home purchasing power because they have higher debt-to-income ratios (DTIs) due to student loans, according to a press release. Mortgage Coach and LoanSense believed that federal IDR plans can substantially reduce the monthly student loan burden for borrowers of every income level and for borrowers who carry student debt and did not graduate.
Mortgage Coach’s partnership with LoanSense gives lenders access to a purchasing power calculator that determines how much borrowers’ monthly student loan payments can be reduced – and how much their home purchasing power can be increased – through enrollment in an IDR plan.
Once borrower eligibility is determined, loan originators can electronically refer borrowers who would benefit from enrolling in an IDR plan to LoanSense, where they will receive assistance navigating the complexities of correctly completing and submitting their IDR application. Upon IDR plan enrollment, LoanSense notifies lenders so they may resume the home financing process with increased purchase power, which can be accessed in as little as three weeks.
LoanSense also helps eligible consumers correctly enroll in PSLF, which discharges remaining federal student loan debt after 10 years of full-time employment in public service.
Alongside each LoanSense purchasing power calculation, Mortgage Coach generates a Rent vs. Own Total Cost Analysis, which compares the costs and equity gains of renting, owning and owning a more valuable home with increased purchase power over time. The illustration of the borrower’s adjusted monthly student loan burden and mortgage benefits is a first-of-its-kind innovation according to the companies.
“Addressing the barrier student loans present to homeownership is part of Mortgage Coach’s ongoing and relentless effort to equip lenders with data and technology benefits to better serve their communities with more home financing options,” said Mortgage Coach president Joe Puthur. “The impact of reducing a borrower’s student loan payment by a few hundred dollars a month can be life-altering. It could mean $50,000 more for a better school district, an extra bedroom, or closer proximity to employment.”
“A home is 80% of the average American’s wealth at retirement and delaying access to student-debt burdened borrowers will have major socio-economic impacts,” said LoanSense Founder and CEO Catalina Kaiyoorawongs.