Tips For Buying A Home With Student Loan Debt
Posted on: 13 April 2018
When it comes to going to school, whether it's a four-year college, medical school, law school, or a different type of program, it can be very difficult to graduate with no debt. In recent years tuition and fees have gone up dramatically at most learning institutions. Currently, the average amount of student loan debt is a staggering $37,172. This debt can be very difficult to pay down. It can also make borrowing money for other purchases more difficult, especially if you are looking to buy a home. If you are trying to purchase a home but also have a lot of student loan debt, here are three tips.
Take A Look At Your Debt-To-Income Ratio
The first thing that you should do if you want to take out a mortgage is to take a look at your debt-to-income ratio. Your debt-to-income ratio is your monthly debt payments divided by your monthly gross pay. To get a qualified mortgage, your debt-to-income ratio needs to be at or under 43 percent. If you have a lot of student debt, it can be difficult to get this ratio down low enough. A few things that you can do include paying off any smaller loans if you can and refinancing your current loans to get a lower monthly payment.
Consider Your Loan Options
If you are looking to take out a mortgage, there are options available other than just conventional mortgages. It can be difficult to get a conventional mortgage if you have a lot of student debt. FHA loans require only 3.5 percent down and are a great option for first time home buyers. VA loans can also be a great alternative to conventional loans if you qualify. It's important to take a close look at your options while looking for a mortgage.
Consider Waiting
When it comes to buying a home, sometimes waiting is a better strategy when student loans are involved. Paying down your student loans now can mean a better deal on your mortgage later on. The sooner you pay off your loans, the easier it will be to qualify for a mortgage. If you have a lot of student loan debt, coming up with a payment plan that allows you to pay down your debt quickly is a good strategy. Renegotiating your student loan terms or refinancing can make getting a mortgage easier down the line.
When it comes to getting a mortgage, it can be difficult if you have a lot of student loan debt. You will want to consider your debt-to-income ratio carefully and whether or not you can improve it. There are also a lot of options available when it comes to mortgages. If you do not qualify for a conventional mortgage because of your student loan debt, another type of loan may be right for you. It may also be a good idea to wait until you have paid off more of your debt.
For more information, contact your preferred mortgage lending service today!
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