How Can Students with Loan Debt Buy a Home?

As a new graduate fresh out of college, you may look at the mountain of debt you accumulated over your collegiate years and wonder how you’re going to afford to live and eat; let alone buy a home. Student loan forgiveness is a hot-button topic in the news right now, and it looks like it’s getting some support. However, it isn’t likely to happen any time soon.

While the debate rages on about how to deal with the student loan crisis, you may be wondering if it’s possible for you to purchase a home with your debt following you. Fortunately, there are ways to navigate the system and purchase a home, even with student loan debt. If you have questions about how to implement the following practices, a mortgage professional is the best person to talk to. He or she can help you decide what your best course of action will be based on your individual situation. Rex Homes, a company of mortgage professionals, also has some helpful information for students who find themselves in this predicament.

Improve Your Ratio of Debt to Income

When applying for a mortgage, a significant factor that lenders consider is how much debt you have incurred vs. how much you are earning. Right out of college, this ratio is unlikely to be in your favor. It’s probable that you have had to enter into an entry level job in order to prove yourself and climb the ranks. Lenders understand that this is part of the process, but seeing huge debt and low income makes them uncomfortable nonetheless.

Small steps like loan consolidation or managing credit card payments can show lenders that you are serious about paying off your debt and ease their mind during the mortgage application process.

Use Fannie Mae

Fannie Mae is a lender that operates through government sponsorship. There are a number of ways that they are currently helping homebuyers through refinance options and tools like debt payment calculators for students.

Partner with a Co-Signer

Entering into an agreement with a co-signer is not a decision to be taken lightly, but certainly an option for some potential homebuyers. A co-signer is someone who guarantees that the loan will be paid if you do not pay it. This person is usually a parent or close family member. However, if at some point you need to remove the co-signer from your loan, you’ll be forced to refinance in order to do so.

Consult a Mortgage Professional

Another helpful step to consider, is scheduling a meeting with a mortgage professional. This person will ensure that you are considering ever applicable angle for your particular case and that you are making good decisions based on the available data.

The thought of moving forward with a huge purchase like that of a home can be scary. Especially when you factor in crippling student loan debt that needs to be considered as well. However, know that there is always assistance available, if you know where to look. A qualified mortgage professional can be extremely helpful asset when buying a home.

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