As graduation season quickly approaches, we may feel overwhelmed with the weight of student loans that have accumulated over the years. Preparing to buy your first home may already be daunting, and student loans do not need to add to this stress. Understanding how student loans impact your financial profile and knowing of available resources can guide the path to owning your first home. Here are some things to consider if you are interested in buying a home with student loans on your mind.
If You Have Student Loan Debt, You’re Not Alone
Student loans are commonly accrued amongst American newly graduates. According to the Lending Tree as of 2023, student loan debt totals $1.77 trillion in America. This reflects the widespread nature of this financial challenge, and proves that if you are struggling with student loans you are certainly not alone, nor are you exempt from the opportunity of purchasing a home.
Paying Student Loans on Time Can Help Improve Credit Score
Your credit score is such an important factor and highly considered by lenders when applying for a mortgage. Also, as your credit score gets higher – the interest rates you qualify for will likely be lower.
Similar to a mortgage, student loans are paid in installments. By taking out a student loan, this adds to your line of credit, which in turn can boost your score. As you continue to pay them off on schedule, this too can have a positive impact on your credit score.
Consider Income-Driven Repayment Plans (IDR)
On the other hand, if you are consistently unable to make payment deadlines, this can take a toll on your credit score. Applying for an income driven repayment plan may help reduce these late payments.
An Income Driven Repayment plan, or an IDR, is a great option for buyers experiencing financial difficulty. When calculating your payment, it takes other financial obligations into account such as income, family size, and other debts, to make your monthly student loan payment more manageable. An IDR can be applied for at the Federal Student Aid website.
Explore Various Loan Programs with an Experienced Lender
Different lending programs cater to various homebuyer needs, each with their own set of guidelines. Navigating through these programs involves considering multiple factors. And even the most in-depth online research and advanced mortgage calculators pale in comparison to advice from an experienced professional. Also, consulting with a mortgage lender and explaining your unique circumstances may reveal better opportunities you hadn’t even anticipated.
Michigan Mortgage Lender, Julie Krumholz from Superior National Bank
Having a trustworthy lender on your side can provide insight, lessen your stress, and make you aware of loan programs specific to your financial situation. Julie Krumholz can be that lender for you!
Julie Krumholz has been helping Michigan homebuyers navigate the mortgage process for over 30 years and helps match them with the best program for their needs. Julie has experienced nearly every facet of the mortgage industry, from processing, closing, loan origination, underwriting, QC auditing, and even co-owning a mortgage brokerage firm. She uses her experience to streamline the mortgage process and provide the best homebuying experience possible.
