A new home in Maryland from Lennar.
A study by nonprofit NeighborWorks America finds that 25 percent of millennials say they are delaying a home purchase because of student loan debt. Now, a homebuilder and mortgage company want to lighten that burden.
Lennar Corporation and subsidiary Eagle Home Mortgage introduced the Student Loan Debt Mortgage Program on a trial basis on Tuesday for those who purchase a new Lennar home. Lennar will pay up to 3 percent of the purchase price of a new Lennar home, up to $13,000 worth of a buyer’s outstanding student loan debt.
“Particularly with millennial buyers, people who want to buy a home of their own are not feeling as though they can move forward,” Jimmy Timmons, President of Eagle Home Mortgage, said in a statement. “Our program is designed to relieve some of that burden and remove that barrier to owning a home.”
As the Wall Street Journal reports, Fannie Mae has also committed to backing these mortgages and will monitor whether the debt forgiveness is factored into the appraisal process. Any loan forgiveness payments won’t inflate the purchase price or add to the loan balance.
This program joins Loftium, another homebuyers’ assistance program in which down payment help is provided in exchange for a share of future Airbnb earnings at the purchased property. Fannie Mae is backing mortgages that Loftium partners in as well.
“This is not without risk,” Jonathan Lawless, Fannie Mae’s vice president of customer solutions, told the Journal. “Builders always want to provide more money and incentives for people to buy their homes. It has the potential to start distorting values.”
Whether this program will encourage similar initiatives from other homebuilders, it could also encourage more first-time buyers to enter the market, thus exacerbating the housing shortage if builders aren’t delivering more homes.
This article originally published at https://dc.urbanturf.com/articles/blog/debt_forgiven_homebuilder_aims_to_lure_buyers_with_student_loan_forgiveness/13054.
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