Can You Buy A Home, EVEN WITH Student Loan Debt?

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A recent article at the Hallmark Abstract Service blog asked the following question…’When Applying For A Mortgage, Is Riding On A Rocket Always Your Best Option?’

The premise of this article was whether a prospective homebuyer shopping for a mortgage is best served by an online provider that basically runs the borrowers information through a decision-making algorithm, and then renders a decision?

For borrowers with no nicks and cuts on their financial information the computer may very well be a good choice to apply for a mortgage. But what about for the many Americans who do not have a pristine personal financial portfolio?

For the financially imperfect among us the process of speaking, maybe face to face, with a live mortgage professional can be a necessity. Why? Because there can be options or steps that can be taken to get a loan approved, that an impersonal online service may not provide.

Student Loans, Homebuyers and Qualifying for a Mortgage

Consider, ‘The U.S. currently has a student debt load of $1.4 trillion, which accounts for 10 percent of all outstanding debt and 35 percent of non-housing debt. The magnitude of the debt continues to grow in size and share of the overall debt in the economy. While this amount of debt has risen, the homeownership rate has fallen, and fallen more steeply among younger generations. From the National Association of REALTORS® Profile of Home Buyers and Sellers, among recent home buyers, 27 percent have student loan debt and the typical amount is $25,000. The share of those with student loan debt rises to 40 percent among first-time home buyers. Even among successful home buyers this amount of debt is cited as a difficulty in their home buying process…

…Among non-homeowners, 83 percent cite student loan debt as the factor delaying them from buying a home. This is most frequently the case due to the fact that the borrowers cannot save for a downpayment because of their student debt. Among homeowners, 28 percent say student debt is impacting the ability to sell their existing home and move to a different home. The delay in buying a home among non-homeowners is seven years and three years for homeowners…‘ (Source)

Here are some thoughts courtesy of Warren Goldberg, owner of the mortgage firm Mortgage Wealth Advisors, who is a Certified Mortgage Planning Specialist® and a published author…

Buy a Home, Even With Student Loan Debt

Student loan debts may be at all-time highs, but Americans aren’t letting that stop them from buying a home. In fact, a recent report shows that 27 percent of all homebuyers have student loan debt. And first-time buyers? A whopping 40 percent have student loans.

So how do they do it? How do they keep making monthly loan installments while saving for a down payment or paying a mortgage at the same time? Here’s how today’s buyers are making it happen.

  • They’re choosing the right loan programs. For buyers with student loan debt, an FHA loan can be a great option. And both Fannie Mae and Freddie Mac have made favorable changes to how student loan debt factors into the mortgage qualification.
  • They’re getting gifts and co-borrowing. Many buyers are choosing to use gift money from family members to pay their down payment or other costs, while others are choosing to co-borrow their mortgage with a significant other or roommate. Both of these help lower the costs of homebuying at the outset.
  • They’re taking advantage of down payment assistance programs. Saving for a down payment is often the hardest part when you’ve got student loan debt on your shoulders. Fortunately, there are hundreds of down payment (and closing cost) assistance programs that can help cover these expenses and more. Check your state, city and county to find out if there are any you qualify for.
  • They’re working on their credit. A great credit score means a great mortgage rate — and less money paid monthly and over the life of the loan. Today’s buyers are boosting their scores by paying down their debts, avoiding late payments and watching their credit reports carefully.

As they say, “where there’s a will, there’s a way.” And today’s young buyers are proof of that.

Michael Haltman, President
Hallmark Abstract Service
Phone: (646) 741-6101
Email: mhaltman@hallmarkabstractllc.com

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