No matter which way you look at politics one thing’s for sure. Change in office means change ahead. This is not about personal opinions of one president to another. Since running for office the Biden/Harris administration has made a talking point of clearing off some student debt nationally. They have called for as much as $50,000 per student.
As a real estate broker I have been looking to prepare for what this means to the market. The number one most positive effect it will have on housing is affordability. Oftentimes when meeting with folks to buy homes we do not get as high of a pre-approval amount as we wish. It is mostly due to debt to income ratios. When a financial institution looks at their ability to lend to you they heavily weigh it on this exact math. While your credit score and other factors come into play this department hurts even the responsible individual.
Paying down $50,000 in school debt all at once clears so serious cash flow. If you were paying over 10 years at 4.66% interest it would put an extra $522 dollars a month in your pocket. In some cases you may even be multiplying this number by two or more if you are buying with another individual.
This change for a single individual would lead to a budget increase of $125,500.00 on the purchase price can you imagine!! Now think about if you were buying with someone else. This would be an increase of $251,000.00 . Now that dream home would not be so far away.
While we are unsure of all the changes that will take place this one we are sure about. Just keep in mind that if everyone gets this home prices are going to go wild in growth. I hope this blog helps you better understand some benefits of paying down school debt. Make sure to check out our Podcast, Facebook Group, and newsletter all under the name “Homeownership”. If you have any questions, comments or concerns please write them below.