Looking to buy a house, but have student debt? Fear not, Soldavi has some helpful tips!
According to research done by Student Loan Hero, there are a total of 44.7 million Americans with student loan debt, accumulating a total of 1.56 Trillion dollars. Many with Student debt believe their odds of purchasing their dream home are slim to none, but following these simple tips will help you achieve homeownership.
Credit Score is Key!
FICO is one of the most popular credit score tracking systems, using a scale ranging from 350-800. In this scale, anything above 750 is considered excellent, while anything above 600 is considered decent, and anything below 600 is considered poor credit.
In order to apply for a mortgage, banks will look at your creditworthiness, and determine whether you have the financial responsibility to pay off a mortgage. It’s important to constantly check your credit score through applications such as Credit Karma, or through your bank, and report any errors to the credit bureau immediately to prevent your score dropping drastically.
Keep Credit Utilization Low
Building credit is important towards applying for a mortgage, but it’s also important not to have high credit utilization. It’s a common rule of thumb to use at most 30% of your credit cards (example $300 out of a $1000 credit card), be in good standing with banks, while paying down debt will help raise your credit score.
Payments
It’s essential to pay your credit card bills on time. The credit bureau focuses greatly on on-time payments, but don’t worry if you’ve missed a payment in the past, FICO tends to weigh in recent payments and future payments greater than past payments.
Refinance your Student Loans
Student loans play a factor in debt-to-income ratio. Refinancing demonstrates your financial capability to pay off your monthly debts quicker. Most banks, if requirements are met, can offer loan interest rates as low as 2.5% , which is drastically lower than Federal Student Loans.
Get a Pre-Approval on Mortgage
People tend to go house hunting before talking to a lender. We recommend you obtain a pre-approval from a lender, and then go house hunting knowing your budget beforehand.
These are our five tips to help you get closer to your dream home. If you have any further questions, feel free to call our office at 209.383.3000 or stop by at 2830 G St. Suite B Merced Ca, and we’ll help you out!