Illinois’ SmartBuy helps home buyers wipe out up to $40,000 in student debt
(The Center Square) – The Illinois Housing Development Authority has launched SmartBuy, a $25 million dollar state program to allow qualified homebuyers to get a mortgage and have up to $40,000 in student debt wiped out at the same time. Unlike other mortgage programs, the student loan is forgiven, and not wrapped into the home mortgage loan.
Lender Jason Accola with Wintrust Mortgage said the program is a “home run” for buyers.
“This is a great way for someone to be able to get out of their student loans,” Accola said.
One recent buyer that Accola worked with found a $250,000 house and has $36,000 in student debt which he is paying off at $291 a month on a 20-year loan. Under the SmartBuy program, the debt will be forgiven if he lives in the home as his primary residence for three years.
Under the program, the buyer also qualifies for $5,000 to help him pay his downpayment and closing costs. That particular buyer will only need $2,500 out of pocket cash to close on the house, Accola said. His mortgage interest rate will be about half a percent higher than the market rate, Accola said.
Wintrust Mortgage is one of three dozen lenders across Illinois who are qualified to help buyers with SmartBuy loans. The IHDA website has a list of qualified lenders that buyers can contact. Illinois is the first state in the country to offer a mortgage program with a student loan forgiveness component.
“As part of a community bank, this is a perfect fit for us,” Accola said.
Accola was the first loan originator in the state to help a buyer close on a SmartBuy loan. Accola said many potential buyers, particularly those saddled with student debt, are under the mistaken impression that they cannot qualify for a mortgage.
“Many people would be surprised to know they actually qualify. If you believe the program can benefit you, then I wouldn’t hesitate. Apply now,” Alcco said. “We work with a number of programs in addition that help people out.”
The SmartBuy program is open to first-time buyers and non-first-time buyers. Deferred Action for Childhood Arrivals (DACA) recipients or “Dreamers” are eligible for the program.
Debt for the student loans must be in the buyer’s name. The buyer’s income cannot exceed $109,200 a year in Cook, DuPage, Kane, Lake, McHenry and Will counties. Other counties have other income limits.
IHDA will pay off student loan debt up to 15% of the purchase price of the home or $40,000, whichever is lower. Anything above the IHDA payoff must be brought to closing by the borrower.
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