Having a student loan debt prevents some people from owning homes. If you need a mortgage for your home but have a student loan, you can maximize your chances of getting approved by using specific strategies. Based on statics, millions of borrowers struggle with student loan debts. More than 50% of college graduates with student loans report that the debt prevents them from buying homes. Despite this, all is not lost. You can purchase your dream home even when you have a student loan by using the following techniques.
If you borrowed $10,000 to pay for your college education, you could consolidate the debt at a lower rate. Making lower payments towards the student loan gives you enough cash to save for the down payment of your future home. The more down payment you have, the higher the chances of getting approved for a mortgage. Refinancing your student loan helps you prove to a mortgage lender that you are on the right path of paying off your loan.
Instead of worrying about getting a mortgage when you are still paying your student loan, you need to set financial goals. Focus on achieving each goal you set whether short term or long term so that you always concentrate on the big picture, which is homeownership. Having goals also prevents you from unnecessary spending. Set goals according to a specific timeline. For instance, you can promise yourself to clear your student loan within a year and start saving for your home as soon as you are have cleared the debt.
Be consistent in your bill payments. For you to obtain a mortgage, lenders have to check your payment history and credit score. Paying bills on time are positive indicators on your credit report. It shows financial responsibility. Set autopay for your accounts so that you never miss out on a critical payment.
When you are prepared to apply for a mortgage, do not apply for any other new loan or credit cards. Doing this can make it hard for you to qualify for a mortgage. Ensure you pay off most of your debts for you to start hunting for a house. Managing your debt-to-income ratio affects the interest rates you can get for the mortgage. The lender has to confirm that you have enough to cover your expenses and also meet your debt obligations. As you repay your debts, work hard to earn more income.
When you start hunting for a house, you need to get preapproved for a mortgage. Go through mortgage financing directory to find the right lender you need to work with. During the application process, submit all the relevant documents required to assess your creditworthiness to minimize your chances of rejection. The lender can preapprove you for a mortgage by focusing on your income, credit profile, assets, and employment.
If you don’t have enough for the down payment, you can get assistance from local and state programs even when you have a student loan. Since every lender has their own eligibility requirements, having a student loan may not disqualify you for a mortgage.