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Many Americans shoulder huge amounts of student loan debt. As recent college graduates venture into the housing market, some are shocked that their student loans affect buying a home.
If you’re looking for a home mortgage in Newton PA, be aware that student loans affect buying a home in 3 significant ways.
1: The Down Payment
A hefty down payment is a smart way to start the home buying process. Large monthly student loan payments, however, can make socking away savings challenging.
What to do? If you’re planning to buy a house, cut back on unnecessary expenditures now. Eat at home more often, cut your cable and cell packages, and cancel anything else you can live without. Stash all your savings in your down payment fund.
2: Type of Mortgage Loan
Home buyers living in Newtown PA with high credit scores and no student loans have their pick of attractive mortgage loans. Carrying monstrous student loan debt might change that. Lenders look at your debt-to-income ratio, which takes all your monthly debt payments and divides it by your monthly income. The higher it is, the fewer mortgage loan options you may enjoy.
What to do? Pay your debt down as much as possible. Pay off credit cards and DON’T accumulate any new debt.
3: Size of Home
While you might yearn for a big house, your student loans may put a clinker in getting one. If you’re paying several hundred dollars a month in loans, a large monthly mortgage payment may be impossible.
What to do? Choose a smaller house or look in neighborhoods that are less expensive. Once you wipe our your student loans, you can always move to a new, larger home.
Student loans affect buying a home for certain, but they aren’t a complete roadblock to home ownership. With some good budgeting and advance planning, you can still become a home owner even with large student loan debt.