Millennials are dealing with significant student debt – the average class of 2016 graduate has over $37,000 in student loans. Paying off student debt has put home buying on the back-burner for many recent grads, and in some cases has hindered their ability to be approved for a mortgage.
Luckily, there are steps grads can take to increase their chances of securing a mortgage, even if with student debt.
- Plan ahead – Buying a home is a big financial commitment. Before beginning the mortgage process, sit down and review personal finances and all the necessary paperwork. Get an idea of how much you can realistically afford each month for your mortgage payment in addition to upfront costs and ongoing maintenance.
- Work on your credit score – A higher your credit score will help your chances of qualifying for a mortgage. Work on paying off any debts you can, pay all payments on time and in full, and keep credit cards in good standing.
- Pay off small balances – If you have small balances on any of your debts, work to pay those off first. Lenders want to know you have the funds to afford a mortgage payment each month so the less debt you have the more likely you are to get approval for a mortgage.
- Avoid big purchases – If you're preparing to buy a home, put other large purchases, like a new car, on the back burner for now. Try to avoid purchasing anything that requires you to apply for a loan or open a large line of credit.
- Payment Assistance Programs – If you are a first-time homebuyer or meet certain income eligibilities, you may qualify for payment assistance. First-time homebuyers in St. Lawrence County are eligible for the First-time Homebuyer Grant, which covers your down payment and some closing costs.
Getting a mortgage loan with student loan debt can seem like an impossible feat but it doesn't have to be. Armed with the right information – and a little discipline - you'll be moving into your new house in no time!