You’ve finally made it. You finished four years of college and landed your first job. It’s starting to feel like you’ve reached adulthood at last. But then, the stresses of home buying begin to enter your mind. How can you afford to buy a home when you have massive student loan debt to pay off?
Luckily, with the help of a good mortgage professional like the ones at Rex Homes, you can purchase a home while still paying off your student loan debt.
What are Some Strategies for Buying a Home While Paying Off Student Loan Debt?
As the saying goes: “where there’s a will, there’s a way”. In this context, if you want to buy a home while you have significant student loan debt, there are ways to go about it efficiently and effectively.
- Decrease your debt-to-income ratio. If the money you are bringing in is significantly less than the money you need to pay out in the form of loan payments, mortgage lenders may be nervous about taking a risk on you. Driving your debt down as much as possible by paying off credit cards and implementing loan consolidation strategies can go a long way in improving your debt-to-income ratio and improving lender confidence.
- Seek Assistance from Fannie Mae. Three of the services offered by Fannie Mae, the government sponsored loan service, are:
- Student Loan Cash-Out Refinance. One possibility for homeowners is to combine student loan debt and the existing mortgage into a new mortgage at a (potentially) lower interest rate.
- Debt Paid by Others. This option allows the borrower to reduce their debt-to-income ratio by excluding debt that others have assisted in paying. An example would be when a family member helps to pay off a credit card for a struggling homebuyer.
- Student Debt Payment Calculation. This service enables loan providers to reference data regarding student loan payments on credit reports, increasing the chance that a potential borrower will qualify for a mortgage.
- Have Someone Co-sign your Loan. Having someone cosign your loan is certainly a viable option, but there are some considerations one must make before deciding on this course of action. Most importantly, it is not possible to remove a co-signer from a loan without refinancing the loan. The refinancing process comes with extra costs as well, so it’s important that everyone who considers using a co-signer on their loan consider all of the extra steps and costs that will come up over the life of the loan.
The Invaluable Assistance of a Mortgage Professional
The process of buying a home can be confusing and stressful, especially if you have to do it on your own. Luckily, there are mortgage professionals who are ready and willing to assist you every step of the way. If you are struggling with student debt, and aren’t sure if it’s possible for you to buy a home; you should know that no matter what your situation is, a mortgage professional will guide you through your options and help you on your path toward purchasing a home.