So you’re ready to buy a house; whether you are looking to settle down, have growing family, or you are simply tried of renting then it’s time to develop a strategy. Buying a house is not always an easy road to take when you are burdened with student loans; however you have options and your goal is not out of reach. If you and your lender get creative, there are ways you can qualify for a mortgage.
Here are Six Tips to Help You Find Your Way into a New Home
- Get the Process Started Early
Staying organized and keeping documentation of your assets, bank statements, or any moneys that have been gifted to you is a brilliant start. Do not wait until the last minute to try to build your credit, increase your income, or fix your debt-to-income ratio. Make sure that you are not trying to make other big purchases during the house buying process. A new better paying job is a great idea; just make sure that you are not changing jobs while trying to be pre-approved for a mortgage. Start any new jobs several months before you attempt to be pre-approved.
- Improving Your Credit Score
Your credit score has a lot to do with whether you qualify for mortgage loans. Getting a mortgage with student loan debt is more difficult when your credit needs work. In most cases you will have to have at least a 640 credit score in order to qualify for a mortgage loan. Some debt on your credit report is actually a good thing in the long run; however you will need to maintain a healthy debt. Even if you do not use one of the accounts it would be in your best interest to keep the account open.
- Lower Your Debt-to-Income Ratio
Lowering your debt-to-income ratio will show the lender that you do not have more debt than you do income, and that you can afford to pay your new mortgage. You can decrease your debt by paying off any low balances from your credit report, refinancing your student loan, or enroll in a government income based repayment plan that will lower your student loan payments. You can also increase your income as well which will improve your debt-to-income ratio.
- Do Not Make Any Large Purchases
Getting a mortgage with student loan debt would be very difficult if you make any large purchases before trying to get pre-approved for your home loan. If you are in need of buying a new car or making other large purchases it would be ideal to wait until after you have bought your home to attempt getting any other loans.
- Increase Your Income
The income you earn plays a big part in getting a mortgage loan that you will qualify for from a lender. When getting a mortgage with student loan debt you will always want to have more than enough income to cover all of your bills. You can increase your income by picking up extra hours or shifts with your current employer, requesting a raise, or even picking up freelance work.
- Get Pre-Approved Buy a Mortgage Lender
Your pre-approval will give you an idea of how much of a down payment is required as well as the cost of a property that you can afford based on your income and debt-to-income ratio. This will give you a price range for properties to search for within your budget. Keep in mind that there are many government programs to assess when getting a mortgage with student loan debt.
Getting a mortgage with student loan debt can seem overwhelming; however it can be done with knowledge, determination, and self-discipline.