Student loans are vital for some to achieve educational goals but could have adverse effects after graduation. There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt, according to personal finance site Make Lemonade. The idea of buying a home in the future seems impossible for these graduates, but it doesn’t have to be this way. You can buy a home with this debt, you just have to make wise choices during the process.
- Refinance your student loans
Student loan refinancing is the most effective way to lower your monthly payments. When lenders look at your debt-to-income ratio, they are also looking at your monthly student loan payments. Student loan refinancing works with federal student loans, private student loans or both.
- Get your credit score where it needs to be
Your credit score is a very significant part in your chance to buying a home. Current conventional mortgage guidelines are a bit more lenient for borrowers with student loans. Since conventional mortgages typically require a borrower to have higher credit scores, it is important to build credit scores as high as possible. Speak to your lender about where your score needs to be to obtain conventional financing.
- Find ways to pay off student loan debt faster
If education debt is impeding your homeownership goals, consider finding ways to pay off your debt sooner. You can do so by applying additional principle payments as often as possible. Find ways to bring in additional income that can solely be dedicated to student loan debt.
Student loans themselves will not prevent you from owning a home but can greatly impact the amount you qualify for, which often makes homeownership less appealing for some. Speak with your lender about your options. The results may surprise you.