The Boston North Shore home buying market has been impacted by many potential first-time home buyers wrestling with repaying student loans. A recent BankRate.com survey revealed that young adults who would otherwise be prospective home buyers shelved their home search until their student debt is either reduced significantly or paid entirely. To make matters worse, many of these first-time buyers are under the mistaken impression that having student loan debt will prevent them from obtaining a mortgage.
Impact of Student Loan Debt on the Boston North Shore Home Buying Market
The Amount of Debt Isn't as Important as Your Ability to Repay
Lenders look primarily at what a borrower’s debt-to-income (DTI) ratio is to underwrite a mortgage loan. A high DTI (over roughly 42%) may adversely impact your ability to obtain a loan, but anything less than that percentage should qualify you for a mortgage.
Your Credit Score is Only Impacted by Slow Payment History
Just because you may have student loan debt isn’t a negative mark against your credit score. However, if you have a poor repayment record, that will certainly lower your score. And because you will be required to pay a higher rate of interest if your credit score is low, your monthly mortgage payment will be more.
Repaying Your Student Loan Reduces the Amount of Money for a Down Payment
While you may have trouble saving money and reducing your student loan debt, you may still be able to qualify for a low-down payment loan. There are numerous programs available in the Boston North Shore home buying market for first-time home buyers. You can research them online, or discuss them with your real estate professional or a mortgage lending officer.
With a little familiarization with the purchase process and some of its capabilities and requirements, there are opportunities for first time Boston North Shore home buyers. So, don’t necessarily allow the repayment of student debt create a roadblock to home ownership. The two can co-exist.
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