4 Ways to Overcome Student Loan Debt
Student Loan debt may feel like a giant insurmountable burden that’s destroying the dream of owning your very own home, but it can be conquered. Here are 4 ways to buy a home when facing student loan debt.
Pay your debts on time, keep your credit card balances low, and check your credit score for discrepancies. The better your credit score the less you will pay each month on your mortgage. When battling student loan debt every dollar you save on your monthly payment can make a huge difference towards affordability.
It can be difficult to save for a home when huge portions of your paycheck disappear to student loan debt every month. Luckily, there are plenty of options out there for individuals or families who are having difficulty saving enough.
DTI or Debt to income ratio measures what percentage of your gross monthly income goes to paying you’re your loans and other debt. Gross monthly income is how much you earn before taxes and other deductions are taken out.
For example: If you gross $2,000 every month and your combined monthly debt payments totals $600 your DTI would be .3.
Most borrowers will only go as high as .43. If you are carrying a lot of student loan debt it is important to keep other types of debt low so you will be able to qualify for a mortgage.
In high cost of living areas like New Jersey, having a co-borrower is sometimes the only way to afford a home. That extra income from another person can help overcome the fact that you may have a huge amount of student loan debt.
Another way a lot of millennials are affording homes is because of gift money from their parents. Sometimes the only way to get started is getting a little help from someone else.