If you are like the majority of people across the US, you may have student debt, but that does not necessarily preclude you from qualifying for a . For a long time, it was a tradition for people to get a new home after they finished college. Unfortunately, due to the increase in the cost of schooling, many new graduates feel that they will not qualify for a mortgage due to their student loans. This is not always the case. You just need to know what your options are. Improving your financial portfolio is a crucial step that can help you fulfill your homeowner dreams. Following the next tips, can help you get a home loan regardless of your student debt.
Tricks to Getting a Loan When You Also Have Debt
Look for a home that you can afford
It is so tempting to look for your dream items. Huge kitchens or rooms for future children seem great, but they can cost a lot. Research housing prices and what kind of home you will actually be able to afford. Statistically, people only stay in a house for about ten years, so if you are a first-time home buyer, you may want to start with something smaller and upgrade later.
Try to lower other debts
When a lender is reviewing your information for a home loan approval, they are looking for a few standard things. They often look for some of the following as key features of your worthiness for their mortgages.
How much income you make
That last one is a crucial factor that you can change relatively quickly. Your debt to income ratio is a number that allows your lender to assess your monthly financial obligations. The items that are typically included in this calculation are car payments, student loan payments, and credit card debt. Keeping your DTI as low as possible raises your likelihood of being accepted for a mortgage.
Try to reduce the amount you pay each month on your student loans.
Even if you do not have a lot of other debt, just having a large amount of student loan debt can raise your DTI. Your mortgage servicer is going to want reassurance that you have enough income to make your home loan payments every month. If you can refinance your student debt or if you qualify for a student income-based payment plan, that could lower your monthly obligation enough to affect your DTI and make your financial institution feel more secure about you as a mortgage risk.
Try your best to make all payments on time
When you are trying to get your credit in shape for your home loan lenders to look at, it is essential to make your payments on time. Lenders will be looking to see if you have paid all of your debts on time. Generally, financial institutions will look back at least seven months. This means you should prepare ahead of time. You will need to ensure you make each payment on time. This does not just apply to your student loans but also your rent, car bill, and credit card payments as well. By making these financial obligations on time, you will be proving to the lender that you are more likely to pay your mortgage even with your current bills.
Unfortunately, when you buy a house, it is not just about getting a mortgage. You have to be able to pay your closing costs up front and have money for a substantial down payment. There are other costs such as the inspection, home insurance premiums, and any fees associated with getting your title. By having a high amount saved for the down payment you show the lender how responsible you have been with money and that you are willing to have a more significant financial stake in the home. By having a substantial portion of the house paid off with the down payment, the mortgage servicer will view you as less of a flight risk for the home loan.
Nationwide Lending and Boca Raton Home Loans
Here at , we have many options for different mortgages. Some of our various loan options are explicitly made for first time home buyers or buyers who have a varied DTI or credit profile and may need additional help. You can speak with a loan specialist on our team who can discuss financial requirements and what might be available to meet your needs. We want to help you get the home loan that is perfect for you.