5 Strategies to Tackle a Mortgage Despite Student Loans
If you’re one of the 45 million Americans with outstanding student loan debt, buying a home may seem like a pipe dream. However, your mortgage aspirations don’t necessarily end at your student loan balance.
A careful review of your repayment options, the right lending partner and some smart financial planning can put home ownership back within reach. We’ve put together a list of five strategies that could have you closing on your new home earlier than you thought possible.
- Income-Driven Repayment
Regardless of whether you’re shopping for a home, it’s worth exploring your student loan repayment options. Several income-driven repayment (IDR) plans now exist for virtually any borrower with federal student loans. These plans calculate a monthly payment based on your current income, which could help you prioritize saving for a down payment. Loan forgiveness options also exist with some of these plans, in as little as 10 years in the case of non-profit employees.
The type of mortgages available to you will depend on your particular financial situation and debt-to-income ratio, so it’s important to talk to a loan officer about your options early to find out if you’re on the right track.
- Minimize Additional Debt
It’s possible your student debt isn’t the only thing holding you back. Lenders will look at all of your financial responsibilities when evaluating you as a borrower. Focus on paying down any credit card balances or opting for a more affordable vehicle. If you can cut out your other debt, your student loans may not be as much of a problem as you expected.
Is your debt preventing you from buying a house, or just the house you want? Compromise is the name of the game for almost any home shopper. You’ll need to be reasonable when it comes to your budget, especially if you have high student loan debt with entry-level income. While your dream house on a large lot may be more than you can afford, smaller homes, or even condo or townhouse properties, could be a realistic option.
- Explore Mortgage Options
Be sure to do your research when it comes to the mortgage programs for which you might be eligible. Certain professions, such as doctors, dentists, lawyers and teachers, have access to exclusive mortgage products to make buying a home more likely. These may feature higher debt-to-income limits, eliminate the need for private mortgage insurance, or avoid down payment requirements.
- Be Patient
One of the most effective ways to ensure that a mortgage is in your future is to create a strong financial plan, stick with it, and be patient. Putting as much of your income as possible toward reducing debt, paying your bills on time, and living within your means will result in a healthy credit score, making you a prime candidate for a mortgage sooner, rather than later.
If you’re looking for an experienced lender to walk you through the mortgage process, now or in the future, visit OpenMortgage.com or call to speak with a representative.