Does student loan debt cause some first time home buyers to delay buying real estate property? The first rule of finding out is to not assume anything. You may have a lot of student loan debt, but try to qualify for a mortgage anyway. The first step is to speak to a qualified mortgage lender to see how it is effecting your situation.
The real estate market is complex, and qualifying for a home loan can be a difficult process, especially if this is your first time. Debt to income ratio is one thing mortgage lenders look at, but it is not the only thing. How long have you been employed at your current job? What is your credit score? Also, not all debt is treated equally. Things like back taxes owed and child support play a much larger role in qualifying for a home loan than medical and school debts.
Below are some things you can do to reduce the impact of student loan debt in order to purchase a house.
The first step to to speak to a mortgage professional. They are experts and sometimes have creative solutions to student loan challenges. Mortgage rules are changing all the time. Recently FHA loan rules made it more difficult to qualify for a home loan than it was in the past, but different types of loans have different rules so don’t assume anything. If your lender finds that you don’t qualify based on your student loan debt, there are two basic things you can do.
1) Increase Your Income
I know… easier said than done. The major advantage of going to college is the opportunity to make more income over your lifetime. Although college debt can be a nuisance when trying to apply for credit when you are young, if you significantly increase your income and income opportunities over time, college debt becomes less of a problem.
2) Decrease Your Mortgage Payment
At the end of the day a mortgage lender looks at the financial risk involved in giving you money to buy a home. To reduce your payments, you have to reduce your risk. There are three primary ways to reduce both risk and your mortgage payment:
1) Find a lower priced home.
2) Increase your down payment.
3) Buy when mortgage interest rates have decreased.
Whatever your situation, if you are thinking about buying or selling a home feel free to chat with me about it by calling my cell phone directly at 317-201-1710.