Being a first-time homebuyer can be stressful for anyone, no matter the financial situation you're in. It's a time-consuming process that can be tiring; it becomes even more stressful when debt is on top of everything else. Millions and millions of folks across the country are burdened with student debt of some kind. Debt of any kind will make obtaining a loan more difficult, but student loan debt is by far the most common form. The good news is that you're not alone. Many Americans are in your same, position, and while buying a home while you've got student loan debt, it's far from impossible.
Tips for Saving
Often, people owe large amounts, leading to loan payments taking up a significant portion of your personal income. This also can lead to a lowered credit score and makes it hard to save for the future. Plus, you still have all of your regular monthly expenses like food, rent, and utilities. All of these things can make it difficult to buy a home while still owing money, but it is possible.
One of the best ways to begin saving for that down payment is by opening a new savings account dedicated to saving for a home's down payment. Have this money automatically deposited and be strict with yourself about it. Refinancing can be a good option for some to decrease monthly payments and increase the amount you can kick into your new savings account.
Conversely, if you've got spare income, pay down your loans as fast as possible to remove the obstacle once and for all. It comes down to your debt-to-income ratio, which you'll need to improve to grow your chances of finding your dream home.
Boost Your Credit Score
In addition to your student loan debt, your credit score is another huge factor in your mortgage application process. The purpose of your credit score is to give lenders an expectation of your ability to pay off loans. The higher the score, the higher the likelihood you'll be approved. Paying your loans on time and consistently will help improve your credit score, so will paying your credit card bills punctually and not adding more debt through card use. Don't close your credit cards out either; it can have a negative impact; just carry a zero balance.
Do Your Research
If you're still having trouble with your student loans and saving enough for a down payment, look into assistance programs that you may qualify for. There are many first-time buyer mortgage programs available as well to help new homeowners. Some can lower interest rates and reduce downpayments, giving a huge relief to student debt holding you down.
Contact Bergen Realty Team today for help with buying your first home. Our team has unparalleled local knowledge and can help make the process easier.