It’s common knowledge these days that Millennials and other members of Generation Z are in debt because of student loans. Forbes even says that the recent 20% decline in home-ownership is because of the increasing rates of college education debt. Although it is challenging to clear your debt as quickly as possible, it shouldn’t stop you from buying your dream home.
One of the critical things that you need to remember is to stay on top of your debt. You need to focus on what you can do to finance your dream of becoming a homeowner.
Student debt is not the only thing that will affect your loan application.
It’s not only your debt that would determine if financial institutions will approve your loan application. Your credit score also matters, and it will make or break your mortgage request. Financial institutions will use your credit score as a basis to determine how well you can keep up with your debts every month.
If you pay your student loan every month without any hitch, then there’s a chance that your mortgage request will get approved.
Your application will be approved if your credit score is at 590. But it would even be better if you can raise it as high as possible before you apply for a loan. Meanwhile, aiming to get 730 or above will increase your chances of getting approved. Also, find different ways to boost your credit score. One way to do it is by making sure that you pay your other bills on time. Nowadays, it’s quite easy to keep track of your personal finance through their apps.
Aside from your credit score, you also need to think about your debt-to-income ratio. Lenders will look at all your existing debts, including your student loan, and see how much they’re willing to lend you. There’s a considerable chance that your student loan is taking a massive chunk of your debt-to-income ratio. So, it’s best to see if you can merge or refinance your existing debt so you can lower your monthly payments. Once you’re ready to look for any of the properties or land for sale on Donnybrook Road, then it’s time to apply for a mortgage approval.
Check the interest rates of your student loan.
When it comes to thinking about your future, your student loan shouldn’t hold you back.
So, one good rule of thumb is to investigate the interest rates of your student loan. See if there’s any chance that you can squeeze in a few investments. Also, check if it needs even bigger monthly payments to cover the interest rate. If your student-loan interest rate is still on the higher end, then consider refinancing it to merge your debt.
Paying off your student loan is quite an achievement for most people — the quicker that you pay it off, the better that you’ll feel about your financial health. At the same time, having an existing student debt shouldn’t also stop you from living your life. Learn to balance things out and see if you can squeeze in a few savings now and then.