There are around 40 million college graduates that have student debt that equals 1.4 trillion dollars. Besides being a startling statistic, this enormous amount of debt has caused many young people who are paying for student loans to feel overwhelmed about buying a home. If you’re someone who is paying off student debt and thinking your dream home ownership will never happen, it is important to remember that you are not alone and there are plenty of people who buy a home that have debt, even student loan debt. Today we are sharing the Tips for Buying a Home While Paying Student Loans and we hope that they help you on your path to home ownership.
Tips for Buying a Home While Paying Student Loans
There are key things that a mortgage lender will look at before giving approval:
- Down Payment
Having a good understanding of your financial picture in those three areas will help you determine if and when home ownership is possible for you. Here are a few tips for buying a home while paying for student loans.
Work On Your Credit
If you have bad credit or no credit at all, there are ways to help it! One of the first things you should be doing is paying your student loans on time. If you miss a payment or are continuously late, it will affect your credit. You will also want to keep your balances low on credit cards. One of the last tips for credit may seem odd, but it is to have different types of credit cards. If you strictly only have store credit cards, look into opening up a major credit card or vice versa. Use a a website like Credit Card Insider to find the best cards for your situation.
It may be fun to look on Zillow and find your dream house, but it could be dangerous for your dreams if you do not actually know what your price range may be. It is easy to assume you can afford something because it is your dream home. Getting pre-approved gives you a realistic idea of what you can actually afford and shows sellers that you are serious about buying when you’re home shopping. It is important to get pre-approved because the lender will have looked at the key things like credit, income, and debt (which includes your student loans) so you will have a better idea of what houses are in your price range.
Save Money for a Down Payment
A 20% down payment sounds intimidating, but in reality this may be the easiest step because there are plenty of simple ways to save money while paying for student loans. One of the easiest and most beneficial things you could do is to refinance your student loans. You can see if you are qualified here. Refinancing your student loans can also be beneficial to being approved for a mortgage because it lowers your debt-to-income ratio. You can use the money saved and put it towards your down payment.
If you are still feeling uneasy about the situation, see if you qualify for first-time homebuyer grants and programs!