Paying off Student Loans? You Can Still Qualify for a Mortgage
The more educated you are, the more likely you are to be well informed, well prepared to embark on an ambitious career and probably knee deep in student debt. Statistics show that after graduation, most people will take several years to pay off all the student debt. This is especially bad news for people who are trying to purchase their first home and qualify for a mortgage loan.
Usually lenders will evaluate all of your debts (like your student loans, car payments, credit card bills, etc.) before they approve your mortgage application. Meaning that if you have a large student loan hanging over your head, chances are you will be rejected by the bank or the loaning agency.
Here’s what you need to do:
- Make your student loan payments consistent. By making your student loan payments every month, you are showing the mortgage lender how responsible you are. As an added benefit, every time you mail off another check, you’re paying down your debt. That means you’ll have less and less debt that will count towards your debt-to-income ratio when you apply for a mortgage – which increases your odds of getting approved.
- Pay more than the minimum anytime you get a chance to pay a little extra on your student loan debt, like when you get a bonus at work or a tax refund check. Remember, the goal is to get your debt amount as low as possible before you apply for a mortgage!
- Consider an Adjustable-rate mortgage (ARM). ARMs are recommended for fresh graduates because they carry a lower initial rate than fixed-rate mortgages. Many homeowners are afraid of ARMs, because they fear they won’t be able to afford their payments when rates rise. Graduates on the other hand are more confident about ARMs and do not share this fear. This is mainly because they are confident their income will rise in the next few years.
Having student loans should not discourage you from embarking on the mission to own your own home. Your Home mortgage loan is just a phone call away. Call First and Second Mortgages at 1-866-405-1228 and get started now.