Buying with Student Loan Debt
We have spent the last few weeks talking about the consequences of student debt on our children’s futures. But if you are in a situation like mine where the decision was already made and you have accumulated a considerable amount of student debt, you are left wondering how that might limit your future. One might wonder, “could I buy a house someday despite my debt?” In fact, an article on Bankrate quotes the managing director of survey research and communications for NAR (National Association of Realtors), Jessica Lautz, “of those who don’t own a home, 83 percent of those say that student loan debt is holding them back from purchasing a home.”
It is true that having high debt relative to your income can make you less attractive to a lender which can reduce the chances for getting approved for a mortgage loan; this is due to the limits put in place by debt to income ratio. But listen carefully, you can still get a mortgage. Once again, it is possible to purchase a home with student loan debt. You just need to be aware of your options and take steps to make yourself more appealing to a lender. For example, reduce the amount of debt you have in areas other than student loans; pay off credit cards or pay down the debt on your car loan. If you aren’t in a position to pay down debt, the article on Bankrate suggests, “consider refinancing your other loans to reduce the amount you have to pay every month.” After all, reducing the amount of money that is committed to going to cover other debt will free the amount that could go towards a mortgage.
There are other options, such as refinancing your student loans or taking advantage of the government resources available that are highlighted in the Bankrate article, sourced below. But to truly understand what is available to you it is best to reach out to a mortgage banker and discuss your options. The sourced article recommends turning to a mortgage lender that “will allow for higher debt-to-income ratios than average depending on the applicant’s circumstances”. Stockton’s mortgage bankers are encouraged to look at the whole package that an applicant possesses and would be eager to see what options are available for you despite your student debt. So please don’t let it keep you from considering achieving your dreams of homeownership; instead reach out to one of our loan officers at 1-888-914-2276.