Now-a-days student loan debt is almost inevitable but don’t let that discourage you when it comes to the housing market!Coming out of college with hefty debt caused by endless student loans can leave you feeling financially depressed. But, don’t let that stop you from buying the perfect home - homeownership is still possible! These three steps can help you keep your dreams of homeownership on the horizon, no matter your financial situation.
- Build your credit score. We all know that your credit score is important when applying for a mortgage but here is how student loans come in to play -pay them all, on time. Paying your student loans on time will help to boost your credit score. If you miss some payments your credit score can be majorly affected. Building your credit score is important because mortgage lenders use it to determine the interest rate on your mortgage. So make sure you keep it healthy!
- Control your debt-to-income ratio. Mortgage lenders also use your debt-to-income ratio when determining how much of a loan you can qualify for. Good news though, the DTI ratio only looks at monthly debts to monthly expenses, so your overall mound of student debt won’t have as large of an effect. Try to control the other debt that you take on such as car payments or credit card expenses. You also have the option of consolidating your loans so that you can reduce your overall payment, thus reducing your debt-to-income ratio.
- Don’t forget about your down payment. Start saving every bit of money that comes your way for a down payment. If you have federal loans with less of an interest rate then it could make sense to hold off on paying those and putting the money to your down payment. Either way start thinking smart and saving up.
These tips can help make the financial obligations of buying a home while paying off student debt less terrifying. If you want to learn more about financing a home please contact a member of our Housing Buzz Team today.
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