A Mortgage For Those Burdened With Big Student Loan Debt

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May 25, 2016

For Millennials who have completed college, student debt is a big talking point, especially when it comes to the effects of student debt on their ability to do other things like get married, have children, or purchase a home. College students are graduating with more debt than ever before, and as such, one Florida investment advisor has devised a path for high-earning young professionals who are saddled with student debt to have a clear path to homeownership, nationalmortgagenews.comreports.

Within the next two months, John Burkey, of Burkey Capital, will launch the BurkeyLoan, which basically refinances student loans into a mortgage to better allow for individuals to purchase a home. Initially, the loan will target college graduates who are high-earners and are seeking jumbo mortgages in the $425,000 to $600,000 range. The goal, though, is to make the loan available for those needing financing for houses in the high $200,000s by the end of the year.

A typical undergrad with a bachelor’s degree and $30,000 of debt may make a monthly student loan payment of $350, meaning there often isn’t enough meat on the bone to then make a mortgage payment on top of that. But for anyone who continues on to graduate school, law school, or medical school, that number can balloon to $50,000 to upward of $100,000.

For a prospective homebuyer looking at a $500,000 house but who also has $50,000 in student loans, a typical BurkeyLoan would work by combing the two amounts into a single mortgage and require the buyer to make a down payment of around $50,000. After the down payment, the $500,000 balance would be almost equal to a 100 percent loan-to-value mortgage with a rate that would be far less than the rate on the student loans on their own, which would be between 6 percent and 7 percent.

Once the product is perfected, Burkey plans to make them available for those lower in the market.

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