Are you a student burdened with college loan and thinking of applying for a mortgage? Well, most of potential buyers like you are skeptical and worried that their existing debts would not make it possible for them to buy any house property. Let us discuss some first time buyers experience and hiccups along the journey.
Relatively young people with less buying skills
Being a first-time property buyer is an altogether different ball game compared to an experienced once. The people belonging to this group are relatively younger than the general segment of interested buyers.
- Educational debts
They have low levels of income, less work experience and not much money left after down payment. On top of that, they are burdened with student loan debts. These are the main reasons for them to be almost virtually absent from the buying scenario.
- Student customers discouraged
In the mortgage world, students as consumers are not actively encouraged. There are broad ranges of mortgages available with low down payment options, and sometimes even nil payment choices are also there.
- Homeownership is tough when young
Thinking that homeownership is tough at this stage, many young students are discouraged and never even dream of applying for housing loans. It is wrong to assume that these are entirely inter related. You can apply for a mortgage, be a proud owner of a house and still pay off the educational loan.
Factors determining availability of loans
There are different factors which are responsible for getting the approval for loans. Down payment on the loan, your credit rating and the income of the household, history of employment are the primary factors to be considered. The size of the down payment influences the types of mortgage loans you can avail. The credit rating is also another influencing factor. The most important factor, however, is the income in comparison to the debt of the household.
Debt to income ratio
The debt to income ratio will be able to assess whether you are in a position to afford a property at this stage or not. The debt to equity ratio indicates the income available monthly to repay your debts. The ratio should be less than forty-three percent to avail mortgage facilities. For students applying for approval for home loans, this may prove to be a problem because the existing student loan eats a significant chunk into your budget. Student loans should not be a cause for concern. There are different means which will help in reduction of your monthly payments towards student loans. This will be a positive step in getting your home loan approved.
It is possible to reduce your student loan obligation by making a changeover to a graduated repayment plan. This will lower your monthly payments which will improve your debt to income ratio. Numerous mortgage programs are also available for first-time buyers. So you do not fret unnecessarily. Check out the different websites to know in details about these various programs.
Bill consolidation loans are becoming much popular these days. These are effective enough to make your life tension free and you can solve your debt issues with ease. So, why not give it a try and go for it.