Buying a Home When You Have Student Loans

Buying a Home When You Have Student Loans

Are you interested in buying a home, but are worried you may not be able to afford the purchase because you still owe money on student loan debt? Even though student loan debt significantly impacts your financial situation, you still may be able to become a homeowner. If you are looking to buy a home in Mount Pleasant, South Carolina, but still have student loans, the loan specialists at Lucey Mortgage Corporation can help. Read on to learn more about things to consider when buying a home when you have student loans.

How Do Student Loans Affect Buying a Home?

If you owe money for student loans, it can affect your ability to purchase a home. First of all, mortgage lenders evaluate your credit score when you apply for a mortgage. If you make consistent student loan payments on time, your credit score will improve, however, if you fail to make a student loan payment, or make a late payment, it will lower your credit score, impacting your ability to qualify for a loan. Student loan obligations will also make it challenging to save money for a down payment, as well as make it more difficult to afford mortgage payments each month. Additionally, student loan debt could increase your debt-to-income ratio, (DTI), which also makes it harder to qualify for a loan and will impact the type of interest rate you can obtain.

Student Loans and Mortgage Approval

Although owing money for student loans can pose a major obstacle when buying a home, it doesn’t make it impossible. There are certain steps you can take to purchase a home when you have student loan debt, including:

  • Decreasing your student loan payments – Decreasing your student loan payments by student loan refinancing or applying for an income driven plan can help to increase your DTI and increase the amount of funds you have each month.
  • Review your credit score – You can try to improve your credit before applying for a loan by making timely payments, keeping older accounts paid off but still open, and checking and adjusting your credit for any possible errors.
  • Reduce your DTI ratio – With a high debt-to-income ratio, qualifying for a mortgage will be more challenging, so it is important to try to pay off current debt in order to increase your income. If you have several accounts, pay off the ones with the lowest balances first to reduce your monthly financial obligations and also try to boost your income by picking up a part time job or asking for a raise.

Although having student loan debt could make it more challenging to become a homeowner, it is still an attainable goal. If you are looking to purchase a home in Mount Pleasant, South Carolina, contact Lucey Mortgage Corporation today.

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Lucey Mortgage Corporation
861 Coleman Blvd
Mount Pleasant, SC 29464

Phone:
843-224-3650
EFax:
888-534-8868

Hours:
MON-THURS 8:30AM - 5PM
FRI by appointment