The housing market has been waiting for millennials to settle down and start buying homes instead of renting or remaining in their parent’s home for a few years now. If you ask any millennials, many of them will say these decisions are being prolonged due to the amount of student debt haunting them. The average Class of 2016 graduate has $37,172 in student debt, up six percent from last year according to https://studentloanhero.com/student-loan-debt-statistics-2016/. This is a huge financial burden to be facing, but we are here to tell you how you can still buy a home even with student loans.
Shop for a Home you can afford
This should be a rule of thumb for any purchase in life, if you can’t afford it, you probably should not be buying it. Home shopping can be tempting. You may be looking at multiple car garages, completely new appliances, high ceilings and much more. It is important not to get carried away. If you are a first-time home buyer, you may have to go with a starter home instead of your dream home but that will come with time.
Minimize Debt from Credit Cards and Car Loans
When applying for a loan these are the main factors taken into consideration:
- Credit Score.
- Monthly debt-to-income ratio.
Your debt-to-income ratio shows the lender your total financial obligations including car payments, credit card debt and student loans in comparison to your income. To keep yours low, keep off as much debt as possible before applying for a mortgage.
Lower your monthly student loan payments
Even if you do not have any other types of debt, having a high student loan monthly payment could give you a high debt-to-income ratio. To lower that ratio […]