According to a study from the National Association of Realtors, one of the biggest obstacles for Millennial home buyers (born 1980-1998) is student loan debt. Of those surveyed, the median debt was $41,200. 20% were homeowners and 28% of them said their student loan debt was preventing them from selling their current home to move into something new. Now, Eagle Home Mortgage, a mortgage lender and subsidiary of Lennar, a Miami-based multi-state home builder, is offering to pay 3% of the home purchase price or up to $13,000 to towards the student loan debt of buyers who purchase one of their new homes.
This isn’t the first program to target student loans. SoFi and Fannie Mae announced in November 2016 a cash-out refinance student loan payoff plan or the Student Loan Payoff ReFi, which allows current homeowners to refinance their mortgage at a lower rate and use the equity in their home to pay off student loans. They estimated that 8.5 million households could be positively affected by the new program. However, the offer from Lennar appears to be unprecedented.
This is an exclusive offer for the home building sector of Lennar Corp. Other loans from Eagle Home Mortgage do not qualify i.e. borrowers must purchase a new home from Lennar. It also only applies to the primary borrower of the student loans. In other words, parents can’t buy a home and direct a payment to their child’s student loans. In addition to the 3% or $13,000, the buyers may qualify for one of Lennar’s other incentive programs, like cash toward closing costs.
Lennar claims that the monetary contribution does not raise the purchase price or balance of the loan. However, some financial professionals worry that incentive programs like this could indirectly drive up prices by making the homes more attractive to buyers. If that’s the case, those who don’t qualify could carry some of the burden. Lennar’s program is still in its trial run, so the effects are yet to be seen.
If you’re one of our local readers, please know that Lennar Corp does not have a presence in the Wilmington market. In North Carolina, they are currently only located in Charlotte, Beaufort, and Raleigh. With student loans being a persistent issue with the younger generation of buyers, it will be interesting to see if this type of incentive is adopted by a builder in our area.
Want to learn more about Lennar’s student loan incentive? Visit Lennar targets Millennials with mortgage that pays off their student loans.
Related Posts
[the_grid name=”Home Buyer Tips”]
