Student loan debt is becoming an epidemic in this country. The number of people who are graduating college with large amounts of student loan debt is steadily increasing year after year. This mostly due to the rising costs of higher education. Student loan debt can add a very big strain on a young home buyers budget and can even make obtaining a home loan difficult for some. However, this doesn't mean that you cant buy a home. Don't be discouraged!
What Lenders are Looking At
We will go over some of the things that lenders are looking for in regards to buying a new home, student loans and increasing your success at obtaining a mortgage loan. Student loans are generally long-term debts just as other types of loans are. Debt is debt and lenders are looking at your ability to repay your existing debt and still be able to comfortably pay a mortgage loan at the same time.
Lenders also look at your payment history with your student loans. This of course will affect your credit score significantly if you default or even have late payments. A good payment history is very important so make those payments on time, every time.
Steps to Ensure That Your Student Loan Debt Won’t Hinder You Later
Take Student Loans Seriously
Student loans are just as serious as any other financial obligation out there, if not more. If you fall behind on your student loans it goes down on your credit and can be extremely unfavorable for you later on. Take your student loans very seriously to avoid default. If you fall behind, contact your student loan lenders immediately to ask explore your options. There are all kinds of programs out there to help with student loans, but you have to ask.
Avoid private lenders when obtaining a student loan.
Private lenders charge significantly higher rates of interest . These loans can also contain shorter-term amortizations which will inflate the total payment obligation.
Consolidate Your Student Loans
Often times student borrowers obtain several different loans over the course of their education. While the final debt amount is roughly the same, the minimum payment due is not. For example, say you take out eight different student loans and the minimum payment amount on each is $25. This automatically shows lenders that you have to fork over at least $400 a month to pay your student loans. This increases you overall debt payments amount and decreases the amount of income you have available to pay on a mortgage loan.
However, if you consolidate your student loans into one, the minimum payment could be much, much lower thus increasing your chances of showing a favorable debt to income ratio.
When its Time to Buy a Home
When it is time for you to get that home loan, be realistic with your monthly bills, your monthly income and the price of home that you looking at purchasing.
Often times, people have their minds set on a specific home or a specific price range and don’t want to look at the anything less than this. They sometimes think even though it will be difficult that they will just make some sacrifices and “make it work”.
Don’t let your the vision you have for your dream home taint the reality of your financial situation. By not looking realistically at your own individual circumstances, you could bite off more than you can chew and create a very strained living situation. This can result in financial burden and steal the joy of owning a new home.
Don’t do this to yourself. If you are cutting it close on your budget, look at a slightly lower price range and remember that you will appreciate the wiggle room later on. Life throw curveballs sometimes and owing less versus more is always the best place to be at when it does.
If you would like more information about getting a mortgage loan in Wisconsin, Lendem Financial can help! Let our expertise in the area help put your mind at ease and get you on your way to being a home owner. Contact Us today.
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