The state of Maryland rolled out a unique program called Maryland SmartBuy, which can help buyers with student debt attain homeownership. This program can also significantly increase a buyer’s purchasing power.
The program works by paying off student debt during the purchase of the home through special Maryland Mortgage Program (MMP) financing. In August 2018, Maryland SmartBuy 2.0 was rolled out and provides an opportunity for homebuyers to purchase any home in Maryland that meets Maryland Mortgage Program guidelines while paying off student debt.
To qualify for either Maryland SmartBuy program, homebuyers must have an existing student debt with a minimum balance of $1,000. Maryland SmartBuy financing provides up to 15% of the home purchase price for the borrower to pay off their outstanding student debt. Maryland SmartBuy 2.0 offers the same student debt relief of 15% of the home purchase price with a recently increased maximum payoff of $40,000.The full student debt must be paid off at the time of the home purchase, and homebuyers must meet all eligibility requirements for the Maryland Mortgage program.
Donna Allenbaugh, Mortgage Broker with The Federal Savings Bank company, offered a comparison showing that when a buyer uses this program to its fullest capacity (paying off approximately $38,900 in student debt) they could increase their purchasing power by more than $21,000. With prices increasing in Worcester County and inventory becoming more limited in the $200,000-300,000 price range, this increase in purchasing power can make a big difference.
The payoff of the student loan debt comes in the form of a loan that is fully forgiveable in five years (reduced by 20% each year till year five when it’s fully forgiven). Financing for the Maryland SmartBuy program is available only through approved Maryland SmartBuy lenders. These lenders can help you confirm your eligibility and ensure you meet all applicable requirements. A list of the approved lenders is available at www.mmp.maryland.gov.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
