The Reality of Buying a Home with Student Loan Debt

It’s no secret that buying a home can be a daunting task. But what if you have student loan debt? Is it even possible to buy a home with all of that debt hanging over your head? The answer is yes, but it’s not going to be easy. This article will explore the reality of buying a home while carrying student loan debt. We’ll discuss the pros and cons, and we’ll give you some tips on making it work.

The impact of student loan debt on homeownership

Recent data suggests that the average college graduate will have $29,927 in student loan debt upon graduation. As this number increases, so does the number of people struggling with paying off their loans and saving for retirement at the same time. This can have a significant impact on homeownership.

For one, the high debt levels make it more difficult for young people to buy a home. Research from Student Loan Hero shows that nearly 60% of millennials with student loan debt say their loans have impacted their ability to purchase a home. And this number is only going to continue to grow as the cost of higher education continues to rise.

But even if you do manage to purchase a home while you’re still paying off your student loans, you could be setting yourself up for future financial trouble. That’s because mortgage lenders typically look at your total monthly debts when considering your loan application. As a result, having large student loan payments each month will likely mean you won’t qualify for a large loan amount.

In the end, it’s essential that you do what is best for your financial future and not let student loans get in the way of saving enough money to purchase a home.

How to buy a home with student loan debt

Buying a home with student loan debt is possible. But, unfortunately, if you’re like most college graduates, you have a considerable amount of student loan debt. So let’s talk about how to buy a house and pay off your loans simultaneously.

If you want to get ahead of your debts–and maybe even save some money–here are five ways that may help you do it:

Look for a mortgage that forgives part or all of your interest if you pay on time for a particular time (For example, five years).
Switch from paying only the monthly minimum payment to paying more than that each month until your balance has been paid off.
Find an employer who offers student loan repayment assistance programs where they’ll pay a certain amount of your loan for you.
Refinance your student loans to a lower interest rate or even an income-based repayment program.
Use a home equity line of credit (HELOC) in combination with refinancing to put off paying one set of bills while using another money source for house payments.

Advantages of Buying a Home with Student Loan Debt

There are actually some advantages of buying a home while you’re still paying off your student loan debt. As long as you’re disciplined with your budget and stay mindful of your overall financial picture, buying a home with student loan debt can be a great decision!

Here are a few examples of advantages to buying a home while you’re still paying off your student loans.

You’ll be building equity in a property.
You’ll be able to deduct your mortgage interest from your taxable income.
You’ll have a place to call your own.
You’ll be able to create stability for your family.
You’ll be able to lock in your monthly housing expenses for the long term.

Disadvantages of Buying a Home with Student Loan Debt

There are some disadvantages to buying a home with student loan debt. Let’s take a look at three of them.

First, there’s the issue of affordability. It can be challenging to afford a mortgage when paying off student loan debt.

Second, your monthly payments may be higher than they would be if you didn’t have any debt. This can make it tough to manage all your expenses each month.

Third, buying a home with student loan debt can lengthen the time it takes to pay off your loans. This means you’ll spend more money on interest over the long run.

Despite these disadvantages, there are some ways to overcome them. Here are a few tips:

Get pre-approved for a mortgage. This will help you know how much of a house you can afford and avoid spending too much on your purchase.
Look for a home that’s within your budget. But conversely, don’t be tempted to buy a home that’s outside of your price range, even if you can afford the monthly payments.
Choose a shorter mortgage term. A longer mortgage term will mean smaller monthly payments, but you’ll end up paying more in interest overall.
Make extra payments each month. This will help reduce the amount of interest you pay over the life of your loan.
If you’re considering buying a home with student loan debt, these tips should help you make the best decision for your situation.

By being strategic and thoughtful about your purchase, you can overcome some of the disadvantages of this type of loan. And at the end of the day, you’ll have your very own home to show for it.

In Conclusion

Buying a home with student loan debt can be challenging, but it’s not impossible. By choosing the right mortgage and taking steps to minimize your monthly payments, you’ll have more control over how much interest you end up paying on your loans.

The tips we’ve provided should help you start thinking about this complex decision from all angles. If you’re ready for the Joe’s Northwest team of experts to partner with you, let us know! We’d love to share some insights into what factors might influence the best course of action when buying a home while still repaying student loans.