5 Tips for Buying a Home When You Have Student Loans
Most college students require some kind of financing to complete their degree. Student loan debt is a serious commitment, one which can take up to 20 years to repay. But having a student loan does not mean you will be unable to buy a home, in fact lenders are prepared for this kind of debt and can help you find a loan program which suits your needs.
Before you postpone homeownership, talk with a lender and plan for the purchase; then follow these 5 tips to make sure your search is successful.
UnderstandYourBudget–Shopforahomeyoucanafford.Firsttime homebuyers might not be able to buy the huge home with a pool. Be realistic about your monthly debt and be prepared to buy in your price range.
ReduceRecurringDebt–Asyoubegintoplanforyourhomepurchase,pay down credit card and auto loan debt. These additional drains on your credit and monthly paycheck and add thousands to your home purchasing power.
LowerYourStudentLoanPayments–Considerwaystoreducethe monthly cost of your student loans. Consolidation and refinancing are great ways to reduce the interest on loans and lower your monthly payments.
PayOnTime–Thisruleappliestoallyourdebt,butdemonstrating responsibility for your loans helps lenders see you as good borrowers and could lower your mortgage interest rate.
SaveaLittleLonger–Alargerdownpaymentwillhelpreducethemonthly cost of the mortgage; if you can save for 20% down, you will also save in Private Mortgage Insurance which is added to all loans with a high Loan-to- Value.
Having a student loan does not prevent you from buying and owning a home. Talk to a lender and learn about your unique situation and create a strategy for accomplishing your home ownership goal.