When you’re in college, it seems like the sky is the limit. You get to learn about interesting topics in an environment filled with like-minded individuals. You have professors and advisors who seem to have your best interests in mind, who outline the best courses and route to take to achieve your dream job.
But so often, reality doesn’t hit until you graduate. Soon after you walk across that stage and get your diploma, your student loan payment requests start rolling in. Buying a home and starting a family during this time seems like a pipe dream. How can you possibly make such big investments when you have so much to pay back in loans?
If this sounds like you, don’t worry! There is a way to buy a home with student loan debt, and we’re here to show you how.
Best Ways to Buy a Home with Student Loan Debt
- Improve Your Debt-to-Income Ratio
Lenders look at a number of factors when considering your mortgage rate. One of the biggest items that affects their decision is your debt-to-income ratio. Essentially, if you’re not making a ton of money, and you owe a lot of money, you are not an ideal candidate for a loan. Unfortunately, this describes almost all new graduates.
However, your actions can affect how lenders view you in terms of risk. If you refinance some of your loans and regularly pay off your debt as best you can, you will be seen as a responsible applicant. You can’t necessarily control your salary coming out of school, nor can you control the amount of debt you accumulate through student loans. But you can take small, yet significant steps to improve your financial standing and receive a better mortgage offer.
- Use Available Government Financial Resources
The government organization responsible for financial assistance with regards to prospective mortgage applicants is known as Fannie Mae. Over the years, Fannie Mae has issued multiple recommendations for new graduates who are interested in buying a home. While not all of the recommendations will apply to every new graduate’s specific situation, many of them are applicable to this group.
Some of these options include the use of:
- Student Debt Repayment Calculation.
- Recruiting family or friends to help pay off some of your debt via a repayment method known as “debt paid by others”.
- Student Loan Cash Out Refinance.
- Contemplate a Co-Signer
Having someone co-sign your mortgage is a tempting option and may be a good choice for many new graduates. However, it’s important to note that removing a co-signer from the loan is a long and expensive process. This doesn’t mean you shouldn’t use a co-signer, but you just need to be aware of the extra costs that are likely to occur down the road as the result of using one.
- Partner with a Mortgage Professional
If any of this information feels overwhelming, or if you just feel like you could use some help navigating the world of homebuying with student debt, a mortgage professional can help. These experts know everything there is to know about mortgages and can help get you in a new home quickly. The experts at Rex Homes have more information on their website here: https://blog.rexhomes.com/buying-home-student-loan-debt/
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