How to Move Past Student Debt — and Into a Home
Published: August 25, 2022
Homeownership may not feel within reach when dealing with the burden of student loan debt, but I'm here to assure you—it's possible. After devoting several rewarding years to raising my family at home, another dream has come into fruition for me as I embark on this new journey as a Realtor with Venture Realty Group, LLC in Cabot.
It's my turn to reciprocate the dedication of our Executive Broker, Debbie Witcher Tarrants as she has devoted countless hours in teaching me everything there is to know about real estate. So, if you're facing obstacles such as student loan debt standing between you and your dream home, consider this your personalized guide on how to bridge that gap.
## Understanding the Student Loan Crisis
Student loan debt is pervasive and significantly impacts not only the first-time homebuyers but also individuals in their 40s and 50s. The startling statistic from the National Association of REALTORS® survey shows that 51% of non-homeowners attribute their delayed homeownership to student loan debt, escalating to 60% amongst Millennials.
The following tips are designed to help make homeownership a reality, regardless of your student loan situation.
## 1. Reduce Your Debt-to-Income Ratio
This metric, showing the percentage of your income that goes towards paying off your debts, can heavily influence your ability to get a loan. Keep it below 45%—better yet, aim for a debt-to-income ratio of 36% or less. The avenues to achieve this could be as simple as making more money, spending less, and diligently paying off existing debt.
## 2. Boost Your Credit Score
Your credit score can monumentally affect your financial plans. Payment consistency, judicious use of credit limits, and paying off arrears can help improve your score. Think of it as a measure of your financial discipline.
## 3. Explore Down Payment Assistance Programs
Down payment assistance programs serve to aid prospective homeowners in securing the down payment for a new property. Requirements can vary by state, city, and postcode, but these programs often facilitate ease in making the leap to homeownership.
## 4. Consider a Co-Borrower
Adding a co-borrower to your mortgage can drastically improve your prospects. Their income and credit history can counterbalance your student loan debt, thereby boosting your credentials.
## 5. Investigate Student Loan Protection Programs
Programs like the Public Service Loan Forgiveness, Borrower Defense, and Closed School Discharge or Total and Permanent Disability Discharge might provide you invaluable relief from student debt.
## 6. Leverage Employer-Sponsored Student Loan Repayment Programs
Employers are increasingly offering student loan repayment assistance as an added benefit to their employees. The CARES Act of 2021 also offers tax incentives to companies that help their employees with student loan repayments.
## 7. Lower Your Student Loan Payments
Lowering your monthly student loan payments can improve your debt-to-income ratio. Refinancing your private student loan or opting for income-based repayment plans can make this happen.
## 8. Partner with a Skilled Mortgage Broker
Don't overlook the importance of experienced mortgage brokers who can guide you through down-payment assistance programs, various loan types, and strategies to enhance your financial profile.
Navigating through the hurdles of student loans while targeting homeownership is a journey, not a sprint. There's an increasing tide of public backing for student debt forgiveness, and recent trends indicate a more open view toward making forgiveness programs accessible to more people.
Remember, you're not alone in this intricate journey towards homeownership. Reach me at Angela Benight on 501.231.7775 (cell) or 501.259.8437 (office), or email me at Angelakbrealty@gmail.com. I'm here to guide you through each step, navigate this complex process, and ultimately help turn your dream home into a reality.