Chad Jampedro is president and co-owner of GSF Mortgage
Corp. Currently lending in 32 states, GSF Mortgage continues
to expand into new markets across the country. The GSF
Mortgage business plan is based on consistency and integrity. The company has been successfully lending for more
than 23 years, with the average tenure of a GSF Mortgage
employee being more than 10 years. GSF Mortgage keeps
“Lending In Your Favor.” Reach Jampedro at
Trumps Student Debt
Owning property helps build wealth over the long term
By Chad Jampedro
The level of student-loan debt in this coun- try is staggering and can appropriately be described as reaching a crisis point. The level of debt quadrupled between 2004
to 2016, from $260 billion to $1.4 trillion.
The average student-loan debt owed per person has
nearly doubled in that time, from $18,650 to $33,000.
People are being increasingly saddled with this debt
throughout their entire lives: The number of people
over the age of 60 who are still dealing with student-loan debt is now more than 2.1 million.
This worrisome trend is surely having an impact on
the housing market. According to a recent Federal
Reserve study, a 10 percent increase in student-loan
debt causes a 1 to 2 percentage point drop in the
homeownership rate for student-loan borrowers
during the first five years after exiting school.
It doesn’t have to be this way, however. Homeownership is actually a solution to this dilemma, and
mortgage originators can help borrowers to see this
potential more clearly.
The more student-loan debt a person has, the
less likely the person is to become a homebuyer —
even though an individual’s student-loan debt is
not by itself a determining factor in the mortgage-qualification process. As an individual’s debt level
versus income continues to rise, however, the person
normally becomes more unwilling or unable to become
a first-time homebuyer.
Of course, student-loan debt is only one contributing factor to the delay in young people entering the
housing market. Some people point to the changing
nature of society, as the internet age has led to more
and more business and personal interactions being
conducted solely online, with less of a need for a physical presence in one location.
Although it may be true that people need not be tied
to one specific location for work anymore, the opposite also is true. People can live where they want and
work primarily from their homes or online in many situations, so they can actually choose where to live and
stay there instead of chasing jobs around the country.
In addition, the housing crisis of a decade ago is still
fresh in the minds of some, leading to concerns over
whether or not homeownership is still a sure-fire way
of accumulating wealth. The age at which people are
marrying is on the rise, which no doubt influences
when they begin considering a more permanent
There are certainly situations where becoming a
first-time homebuyer may not feel like the best option
in a young person’s life. In many cases, however, the
decision not to buy a home is made simply because a
person is not aware of all the options and has received
misinformation on the benefits of homeownership.
Many young people simply do not realize that they
can afford to buy a home. They may not be aware of
all the tools and programs that mortgage originators
can offer to accommodate their specific financial situations. They also may not realize that their income
is substantial enough and that the downpayment
required is not as much as they thought.
Much misinformation was spread in the wake of the
housing crisis of 2007, which led many to wonder
about the viability and dependability of the housing market. The crisis happened because of a narrow
set of circumstances led by a surge of questionable
practices by unscrupulous lenders and an increase of
The industry has since made corrections to prevent
such abuses from continuing to take place in an institutional manner. Sound financial practices help to
ensure the benefits to the customer are maximized
while minimizing the risk involved.
Homeownership has long been central to Americans’ ability to amass wealth. Even with the substantial
decline in wealth after the housing bust, the net worth
of homeowners over time has significantly outpaced
that of renters, who tend as a group to accumulate
little, if any, wealth.
A recent study by the Federal Reserve determined
that the average net worth of a homeowner is over
36 times greater than that of a renter ($194,500 versus $5,400). While this is partially because people with
more money are more likely to own a home, it doesn’t
fully explain the extreme difference in the numbers.
When seen in this light, the rent-versus-own debate
doesn’t seem to be much of one at all. Of course, own-
ing is not a viable option for everyone in all situations,
their best bet.
Owning a home is not only a better investment in
most cases, in strict bottom-line terms, the financial
responsibility that is encouraged by homeownership
also leads to greater wealth creation — in ways that
are not always apparent or obvious. Even in instances
where renters have excess cash, saving a substantial amount is difficult without a near-term goal,
such as making a downpayment. It also is difficult to
systematically invest each month in stocks, bonds
and other assets.
Homeownership has proven consistently, time and
again, to be a great strategy for building one’s personal wealth. Over time, property and home values
in most locations appreciate. While rent payments go
into a landlord’s pocket, mortgage payments are in
effect paid to oneself, into the equity of the owner’s
In addition, rent payments continually rise, whereas
a mortgage payment can be locked in at the same rate
for up to 30 years. With interest rates still near historic
lows, in many cases a home loan can be secured at
a significantly lower rate than what is being paid on
a student-loan debt. Consolidating that debt into a
home loan is simply the best option for a lot of people.
This is the opportunity that many are missing out on.
n n n
Homeownership remains a great wealth-building
strategy for all the traditional reasons, but in this age of
low-interest mortgage rates and a student-loan debt
crisis, homeownership becomes an even more important tool for reducing debt and increasing wealth. n
and again, to be a
great strategy for