June 18, 2016

If you had a state bank, you could do this too

Popular Resistance

When first-time homebuyers get ready to purchase a house in North Dakota, Realtors may start handing them information on refinancing student loans as well.

The Bank of North Dakota is partnering with realtors to get the word out about its DEAL One loan program.

Eric Hardmeyer, president of BND, said national reports have shown students graduating with an average of $27,000 to $30,000 in student loans.

“We know they’re delaying major life decisions because of student loan debt,” he said.

Hardmeyer said, in meetings between BND’s student loan and home loan staffs, the housing lenders were seeing the student loans as a barrier to housing loan approval. Those meetings led to an “aha moment.”

“There’s something we can do here,” Hardmeyer said of the conclusion.

A person with a 14 percent interest student loan can refinance it to less than 2 percent interest today with a variable interest loan.

“It’s just huge savings,” Hardmeyer said. “In some cases, it’s a life changer.”

He said, on average, people are refinancing $40,000 worth of student debt at BND. And the average interest rate on the debt was 8 to 9 percent. BND also allows them to stretch payments out from 10 years to 20 or 25 years, which lowers their monthly payment and allows them to get into a home sooner if they choose.


Anonymous said...

Might be a sudden demand for homes in North Dakota soon.

#bail, and leave town

Matt said...

All student loan debt is bullshit, anyhow, ans should be forgotten as quickly as the lost pallet of currency that Bush, Jr. sent to Iraq. Or Afghanistan. Or, somewhere else? Where else? Everywhere else.
Student loan debt is one small way that the capital machine keeps the consuming classes just broke enough to reproduce themselves and their kind.
(To broadly paraphrase that old thinker with the bushy, white beard.)

Unknown said...

Proceed with caution. The problem with this is that it trades a unsecured debt for one that is secured by your house – you know the place you live. This could be a very tempting exchange But it's really important that people understand the trade-offs. If but it's really important that people understand the trade-offs. If you're a renter and you have student loans, if you can't pay the student loan's but you can pay your rent, then you will have a place to live. If your financial troubles processed and yo rent, then you will have a place to live. If your financial troubles get to extreme but nothing can help you no matter what, but for a lot of people it's the student loan that is the killer not the rent – when you fold that student loan debt into a shiny new adjustable rate mortgage all seems great for a while, but if you lose your job and miss those payments now, you will end up foreclosed out of your house.

I don't know anybody who has a 14% student loan – although I'm sure they're out there, they are not the majority. The average person paying six or 7% on a student loan with federal protections in the deferments available might be buying trouble by paying off that loan by refinancing it secured by their home.

There are lots of reasons to want a state bag, but this one is about the least of them. Adjustable rate mortgages are just proof that there is no free lunch – the low rates available now are being purchased with a big chunk of risk. There is a hallway before closures call me with the next round of mortgage resets, and I would hate to see a lot of people lose their home because they couldn't afford the home plus student loan payment rolled into one when the next reset happens.