Homebuyers are waiting until their mid-thirties to take the plunge into homeownership. The majority of homeowners continue to be college graduates. How do they afford to buy a home if they have student loan debt?
Student loans do not tell your entire financial history. If you have healthy credit, a good job and some savings, you are still a good candidate for a home loan even if you have student loan debt. Remember, having some debt and being able to pay it off is better for your credit than having no debt at all. If you are smart about paying your student loan debt, you are better off than if you never had them to begin with.
Lenders recognize that certain high-paying professions require advanced degrees and more debt accrued over those extra years. That’s why we offer special financing programs for doctors, dentists and veterinarians who have student loan debt on their credit report.
What about defaults? While a student loan may not put at risk your chances of buying a home, unfortunately a default will almost certainly delay it. If you were in good credit standing before the default, it may not take that long to repair, but many graduates have little to no credit at time of default, which can hurt. If you haven’t yet, take action immediately to get back on track as you don’t want student loan debt to keep you from buying a home.
Holding debt can be scary and it should not be taken lightly. Debt can easily accrue if not managed properly. Much of the decline in millennial homeownership has been attributed to student loan debt, but it also coincides with the rate of student loan defaults. Just because you have student loan debt, doesn’t mean you shouldn’t at least meet with a lender to discuss your options for buying a home.