Is becoming a homeowner on your wish list, but your student loan debt looms over you like a menacing storm cloud just ready to drown out your dreams? Staring at the numbers and working out the math can leave you feeling hopeless. While your student loan debt may present a specific set of obstacles for you, it doesn’t have to totally destroy your homebuying plans. Here are a few things to consider as you start your journey.
How’s Your Credit?
Checking your credit score is your first stop on your road to getting a loan. Once you know your score, review the entire report. Look out for errors that you can flag to the credit bureau and have fixed. Check out more tips for getting your credit on track here.
What’s Your Debt-to-Income Ratio?
When applying for a loan, lenders are going to look at how much monthly debt you have and divide that by your gross monthly income. That number gives them your debt-to-income (DTI) ratio. They want to see if you can afford a mortgage on top of everything else you have going on. You may struggle with getting a loan if this number is too high. The goal is to reduce your DTI ratio. Pay off those credit card bills. Don’t take on any new car loans. If you’ve done all you can there, you may be able to boost your income to balance things a little better. If you’ve been working at your current job for a while and your performance has been commendable, don’t be afraid to ask for a raise to build up your income.
Do You Understand Your Loan Options?
You might be thinking that there’s no way you can cover a down payment and loan payments. You could be looking at less than you think for your down payment with the help of various assistance programs. Check your eligibility for lower down payment options like VA loans or FHA loans. There are even programs out there specific to first-time home buyers. Do thorough research before you throw in the towel.
Are You Willing to Alter Your Plans?
If you’re aiming way out of your budget, now may be the time to get real and make some adjustments. You may have a specific neighborhood or city in mind, but the market may not be affordable for you at this time. If you need to move into a home right now, consider looking at other markets or rethink what you need or want in a home. Look for areas you are willing to compromise on to help drive your price range down a little more.
Student loan debt is a challenge that can be overcome with proper research and planning. If you’re a first-time buyer looking to get into the market, check out our first-time homebuyer checklist to help you plan. Connect with one of 9,000 agents today to help you take advantage of the market. To find out what you can afford, check out our mortgage calculator to help estimate your monthly payments. Download the REIN.com app and put the power of fresh and accurate listing data in the palm of your hand. Available in the App Store and Google Play Store. For local listings you can trust, start with REIN.com.
