Getting your own home is a huge milestone in your life. For some, it’s the ultimate dream! The process of buying your own home can be intimidating, though, especially if you’re still paying off your student loans.
True enough, there are a lot of things to consider before buying a home while you’re still in debt. Becoming a homeowner while still paying off your student loans can be difficult, but it’s achievable.
If you have a steady source of income and are ready to take that next step, why shouldn’t you?
Why You Should Start Looking for a Home
It’s Less Expensive Than Renting
Compared to renting, buying your own home can be cheaper and more practical. It really depends on where you live or when you plan on purchasing a house. In some places, the total price of your home and your mortgage might amount to less than the average monthly rent.
It’s a big advantage if you can obtain a fixed-rate mortgage. That way, you can rest assured that you’ll be shelling out the same amount until you’ve paid off the full loan amount. In some instances, the rate can lower over the years as well.
It’s an Investment
Although the main reason you’re buying a home is to have a place to live, you can’t completely rule out the possible value of your home in the future. If you find a good home, there’s a chance that its value could increase over the years. Who knows? Maybe in a few years, you’ll find that you’re stable enough to start looking for an upgrade. If it ever comes down to it, your home could become an asset that contributes greatly to your finances.
If you cannot secure a fixed-rate mortgage, it would be a good idea to look for a home while mortgage interests are low. You can never know how much interest rates could change by the time your student loans are paid off, so it’s best to find a home while rates are good.
Things to Consider Before Buying a Home
While your student loans alone won’t hold you back from buying a home, your debt-to-income ratio plays a big part in sealing the deal. You can calculate your DTI by dividing your monthly debts by your monthly income. That being said, you need to make sure the ratio won’t exceed 43%.
A high credit score is also a big help when securing a deal with a lender. To maintain a healthy credit score, you need to be timely and up-to-date with payments for all your existing debts, including your student loans. Otherwise, you might have some trouble securing a mortgage.
Lets Get Ready to Buy
To sum things up, it’s definitely possible to become a homeowner, even as you’re paying off your student loans. It’s a pretty elaborate process with a lot of things to consider, but the sooner you start, the closer you will be to obtaining your dream house. It’s time to take that next step!