Why Student Loan Debt Should Not Stop St. Louis Home Buyers
There is a usual progression in life. Most graduate high school and go on to select a career or attend college. Once settled into a career or finished with a degree many people use to move on to buy a St. Louis house. Currently, this trend is changing. The amount of student loan debt people have is hindering their ability to get a mortgage.
Although it is not impossible for St. Louis home buyers with student debt to secure a mortgage, they must be ready to do their homework.
Mortgage Options
Student loan debt can really bog down a person’s finances. With a high debt to income ratio, they feel helpless in finding a lender who will provide them with a mortgage. It will take some effort but there are options for those that are coming straight out of college.
The first step is to make sure all finances are in order. If there are other debts that have accumulated throughout the years, pay them off first. Any credit cards or small personal loans should be focused on and paid down.
This can take some time. If there are too many debts to handle consider refinancing. Find a lender that is willing to work with the debts and combine them into one larger loan. Having one monthly payment is more feasible and it can help to reduce the amount of interest that is paid on credit cards.
Government Assistance
One option with student loan debt is using an income-based repayment strategy. This can change the amount that is paid to the loans on a monthly basis. It will help to free up more income to use on other debts and help to improve the debt to income ratio.
There are loans like Fannie Mae which strive to allow those with student loan debt to get a mortgage. There are policies that make it easier for students to get a mortgage like debt paid by others. This policy allows debts like credit cards or auto loans to be excluded from the debt to income ratio if they are paid by someone else.
Another is the student loan cash-out refinance option. This allows a St. Louis homeowner to pay their student loan debt off by refinancing into a lower interest rate mortgage. Finally, there is the student debt payment calculation. This lets a lender use information from payments on student loans which will make it easier to get a mortgage.
More Ways to Reduce Debt
Government assistance does not help everyone. Sometimes it is better to talk to a private lender about refinancing to help reduce the interest rate on the loan. Some mortgage lenders are willing to work with a borrower that has abnormally high debt if they sit down and talk about their finances.
In the end, if buying a St. Louis home is straining the budget too much it is time to consider delaying the move. Living with roommates or parents for a few years can help someone accumulate a down payment and pay off some of their debts.
There is no rush to buy a St. Louis house. While it is a goal that many people have, few people are able to do it without months or years of preparation. The key is to pay down all debts as much as possible. Having a low debt to income ratio is important when talking to lenders about mortgages.