Student loans and house buying often go hand-in-hand. After all, the average age of a first-time homebuyer is 36 years old, according to the National Association of Realtors® 2022 Profile of Home Buyers and Sellers. That’s roughly twelve to fourteen years after most people graduate college. Since it takes the average student loan holder 20 years to pay off their loan, chances are, many first- or even second-time homebuyers will still have a student loan in their debt column. Will this impact your ability to purchase a home? That depends on a few factors. As a mortgage company that exists to be the best in the industry by putting your interests first, Mortgage Atlanta breaks those factors down to the top four…
In a perfect world, you’ll have paid your student loan on time month after month to remain in compliance. If so, this can actually help your credit scores, as can your student loan’s role in adding variety to the kinds of loan products in your credit mix. That mix may include credit cards, auto loans, personal loans, and more. In addition to making timely payments on all your loans, it’s wise to keep tabs on your credit score through platforms like Credit Karma, which offers free credit scores, reports, and insights. If anything seems off, you may want to contact the three credit bureaus – Experian, TransUnion, and Equifax – to get any discrepancies cleared up before you’re ready to pursue home buying in Atlanta.
Your debt-to-income (DTI) ratio is a financial metric that mortgage lenders will consider when approving you for a loan. It measures the percentage of your gross monthly income used to pay off debts. Again, credit cards, auto, personal, and student loans will fall under the debt category. In addition to being gainfully employed with a salary that makes it easier to pay off your debt, you can focus on specific aspects of your debt that can improve your DTI ratio. For instance, make a concerted effort to stop using your credit and pay down your credit scores. You can do the same for your auto and personal loans. Chances are, you have a pre-set payment for your student loan, and some student loans penalize you for paying them off early, so focus your energy on those debt categories where you can move the needle in your favor.
Another area where you can improve your chances of getting approved for a mortgage loan is to save as much as possible towards your down payment. While a good credit score and manageable DTI ratio will help, a larger down payment means you’ll require a smaller mortgage loan. There are some loans out there that only require as little as a 3.5% down payment, but if you’re in a position to put down 20% of the home’s asking price, not only will you need to borrow less, but you’ll also be able to forego Private Mortgage Insurance – PMI.
The final measure to take when purchasing a home when you have student loans weighing you down is to find a reliable mortgage company that will explore a variety of options to get you approved so you can pursue your dreams of home ownership. When combining student loans with home buying in Atlanta, you need look no further than the loan specialists at Mortgage Atlanta. We will work tirelessly to find the mortgage solution that will work best for you and guide you on additional steps to take to avoid any obstacles on your way to the closing table. First, we invite you to tour our website at www.Mortgage-Atlanta.com. While there, we encourage you to learn more about our TruQual feature, which allows you to have your loan fully approved and underwritten before you make a purchase offer on a home. Then, when you’re ready, contact our Senior Loan Specialist and company founder, Brian Berman, at bberman@mortgage-atlanta.com or 678.564.1522 to discuss the next steps! We look forward to working with you and helping you transition from home buyer to homeowner!
Source: NAR Finds Share of First-Time Home Buyers Smaller, Older Than Ever Before
