Nowadays, millennials that have graduated from university and landed their dream jobs are more focused on improving their career rather than owning a home. But that’s not because they aren’t interested in owning a property—it’s because they’re still dealing with their student loan debt.
If one of your life’s goals is to buy a house, your student loan shouldn’t hold you back from achieving what you want. Despite the obstacles, it’s possible to invest in a home and apply for a mortgage loan while handling student debt at the same time.
There are plenty of opportunities to increase your chances of obtaining your first ever property. Keep reading below to find out what you can do to achieve what you want without letting your student loan debt get in the way of making it happen.
You Could Focus on Your Debt-to-Income Ratio
An essential method to convince a mortgage lender to approve your loan so you can start moving into your new home is to minimize your debt-to-income ratio (DTI). It’s often one of the crucial requirements you must provide to a lender when undergoing the application process.
All a lender wants to see is that they can guarantee you can balance your financial responsibilities, including your mortgage payment, current debts, and student loan. Some ways you can do to boost your DTI are settling your debts whenever you can, like your student loan, credit card expenses, and other bills.
If you’ve been working at the same company for years now, you could talk to your boss about any promotional opportunities to take a shot at receiving a higher salary. When that doesn’t cut it, you could look for freelance work, a second job, or a side hustle to increase your income and, eventually, your DTI.
You Could Work to Improve Your Credit Rating
Your credit score is a vital factor in your home loan application. It’s what banks and money lenders often review to determine if they can trust you as a borrower and lend you cash without worrying whether you can pay it back on time.
When you maintain a high credit rating, you have greater possibilities of acquiring an approved loan and a lower interest rate. For one thing, you should pay off your student loan debt on time to increase your credit and score.
Other ways to enhance your credit rating are minimizing your credit utilization rate by managing existing debts, paying your bills without missing a deadline, and keeping your paid-off accounts open. That way, you can prove to a potential moneylender that you have a long-running credit history.
You Could Apply and Get a Pre-Approved Mortgage
It can be tempting to start browsing homes you want to buy even before you acquire a house mortgage, but it won’t help improve your situation. Before anything else, you should apply for a home loan and wait until you receive a pre-approval.
A pre-approved loan means finding out the amount of the loan you can expect to receive to give you a better idea about your budget. That way, you can narrow down your search and stick to looking at houses that fit your needs.
When you receive a pre-approved mortgage, it shows homeowners and real estate agents that you’re a potential homebuyer and you have what it takes to provide the down payment. Knowing how serious you are can convince sellers to focus on you rather than other buyers.
It doesn’t matter if you’re still addressing student loan debts until now. If you think you’re ready to invest in real estate and finally have a house you can call your own, you can make your dreams come true in your own ways. You could focus on improving your DTI and credit rating or work on getting a pre-approved mortgage to show lenders that you mean business.
Are you looking to hire the best mortgage lenders in Sacramento? Hawkins Home Loans is dedicated to helping our clients buy a home, refinance your loan, or acquire cash from your home equity. We offer low rates and outstanding services. Get in touch with us today to schedule an appointment!