How to Buy a Home While Paying off Student Loan Debt

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Are you or someone you know excited about today’s robust housing market and wanting to buy but stopped by student loan debt? You are not alone. According to a 2015 survey by American Student Assistance, a Boston-based nonprofit, recorded that more than 50% of student loan borrowers say that their debt affects whether or not they’ll pursue homeownership.shutterstock_519660118That’s a large percentage of the biggest group of potential homeowners thinking that they cannot afford to buy a home. How does someone today take on significant student loans and a mortgage? The following four tips are a great place to start for college graduates looking to buy a home:

1. Wait until the six-month grace period has passed. Many student-loan programs give the recipient a six-month grace period after they have graduated before they need to start repayment. Recent college grads should wait until after this period has passed to begin looking into mortgages and home options. When a person applies for a loan, lenders put a lot of emphasis on monthly debt-to-income ratio. Lenders want to see active payment on loans. Using the six-month grace period to pay off other debts, maintain a good credit score and conduct research into which loan is the best fit is the wisest course of action.

2. Consolidate student loans before looking for a mortgage. Having one loan instead of five different loans is preferred by lenders. This way it is easier to keep track of and also maintain payments.

3. Calculate what kind of mortgage is affordable on top of student loans. It is best to sit down with a lender to discuss these options. The Loan Officers at Wisconsin Mortgage Corporation are highly professional and committed to finding innovative financial solutions that fit individual needs. Some loans require less than 5% down payment and are a great option for potential first-time home buyers.

4. Set up an income-based repayment plan, or at least a plan that won’t eat up a huge chunk of income. After meeting with a Loan Officer at Wisconsin Mortgage Corporation, you will be able to set up the best path to success financially. It will be time to mark out a financial plan for month-to-month expenses and start investing in your future.

There is hope for younger home buyers. The U.S. Department of Housing and Urban Development Secretary Julián Castro said at the 2016 REALTORS® Legislative Meetings and Trade Expo in Washington, “The FHA is reducing the amount of deferred student debt, from 2 percent to 1 percent, which counts against a borrower’s debt-to-income (DTI) ratio. That means someone with $10,000 in deferred student loan debt would have a $100-per-month repayment obligation in calculating DTI, rather than $200.”

Castro also said that legislation is in the works to address the issue of students repaying school debt. Among the bills, the “Empowering Students Through Enhanced Financial Counseling Act,” H.R. 3179, would help ensure students are better prepared to handle debt, and the “Access to Fair Financial Options for Repaying Debt Act,” S. 1948, would provide more repayment options. 

The process for buying a home is never quick and easy no matter who is purchasing a home. Millennials need to understand with a bit of planning and research, the American Dream is theirs to achieve. Contacting a Wisconsin Mortgage Corporation Loan Officer to hammer out the financial details is the best first step. Talking to a Shorewest, REALTOR® will begin the next phase, after that is the realization of being a homeowner! #ShorewestRealtors #HousingMarket #Millennials #AmercianDream


Source Credit: National Association of Realtors,

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Categories: First Time Home Buyers, Home Buying, Homeowner, How to, Monday Motivation, Mortgage

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