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August 19, 2022
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How Can I Buy a Home If I’ve Still Got Heavy Student Debt?

After graduating from college, the future is bright. College graduates, in general, have the ability to work in higher paying jobs as compared to those without a college degree. These new grads also have many more options when it comes to location and type of job.

However, the student loan debt crisis has reached an all-time high, and many new graduates are wondering how they will ever accomplish some of their life goals. For example, many people want to start a family and buy a home. But these pursuits require a lot of money; money that recent graduates don’t usually have.

Fortunately, there are some ways to purchase a home even with seemingly insurmountable levels of student loan debt. In this guide, we will outline some of the options available to new graduates so that they can navigate the tricky housing market and eventually secure their new home. The experts at Rex Homes have also provided a helpful guide on their website here: https://blog.rexhomes.com/buying-home-student-loan-debt/

Focus on Improving Debt to Income Ratio

It’s no secret that one of the most important factors considered by mortgage lenders is an applicant’s debt-to-income ratio. DTI is fairly self-explanatory: it is a measure of how much debt a person has incurred as compared to how much he or she earns in income.

The problem for new graduates is that they often have a very poor debt to income ratio as soon as they graduate from school. Their debt level is high, and they are likely working a lower-paying, entry level job.

These two factors make it very difficult for new graduates to purchase homes.

Luckily, there are some steps that anyone, with any level of debt can take to improve their debt-to-income ratio:

  1. Pay off any credit cards. Anything that you can pay off will help to show lenders that you are dependable and capable of making your payments. Lenders understand the tough situation that new graduates are going through, they just want to see that an applicant is responsible and able to pay back their debts.
  2. Consider Loan Consolidation. This is a choice that will bear some consideration, but loan consolidation can go a long way in improving your mortgage application. This is a responsible step in managing a loan, and reflects favorably in the eyes of a mortgage lender.
  3. Use Government-Backed Services Such as Fannie Mae. There are government resources dedicated to helping new graduates and anyone else who is seeking to buy a home. There are multiple programs and suggestions which Fannie Mae has recommended in order to help new graduates overcome their situation and purchase the home they’ve always dreamed of.

How a Good Mortgage Professional Can Help with the Homebuying Process

As you go through this difficult and scary process of purchasing a home, it’s important to remember that you don’t have to walk this path alone. Mortgage professionals are ready and willing to help you today. These dedicated housing experts know everything there is to know about the system, and have helped countless new graduates find a home that fits their budget.

Call a mortgage professional for a consultation today!

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