How to buy a house, if you are struggling with student loan debt

Student loan debt with option to purchase (Andy Dean Photography)

Education is supposed to be their springboard for a secure financial future, right? But recent years have a perfect storm of constantly rising tuition fees and the weak employment seen with thousands of dollars of student debt and unemployed in sight saddled leave many graduates. I roll.

This explains why so many young people feel Bern. . When Bernie Sanders The crumpled, 74 Vermont senator is with the promise of a large piece of the youth voice hanging College - training somehow to provide freedom of all Americans. Without conditions. And no debt. Who knows if it is possible from a distance? But for some, it's a heck of an attractive idea.

I saw what to do loan debt for a difference students. I've seen it. As a new law school graduate, I got about $ 175,000 outstanding student loans, every day more interest. Yes, I know eventually the law degree be easier (and faster) to pay the bachelor's or even master. But of course I'm not raking in the big bucks - most lawyers are not nearly six figures, in particular the right of the Faculty of Law and not present on the labor market right surfeited.

I even among the more than 50% of borrowers of loans for students who are affected say their debts if they follow the property, according to a survey of 2015 in support of US students, a nonprofit organization based in Boston. And while a graduate student of 22 years, the University is not involved in buying a house, at the age of 32, I think I start my adult life - and that means to buy a house.

"I would say that student loan debt is probably the biggest concern people have to be qualified," said Dan O'Brien, a real estate agent in Indianapolis, IN. "I had to tell me a lot of buyers that they want to buy a house, but they have a lot of student debt and do not think they do enough, because to qualify it."

So if you give to buy a house until that distant day when you have paid all your loans? Not necessarily. Let me give you a little education (free!) When I learned to explore my options for home ownership - and no debt.

Get your plan student loan payments

I began to lenders call shortly after graduation. Absolutely want to speak to a mortgage lender to kill? Tell them that you pay nothing on your student loans now and do not know how it will be able to pay in the future. Hello? Hello?

I did not know, but I was searching a house in the worst of a payment schedule students to buy loans - the period of six months after graduation. He had not yet paid anything, or creating a payment schedule on income based. Only he had several thousand dollars of debt hanging over me, deter potential lenders.

"It used to be that show some programs you have to move [payment of debts postpone] and the participants would have that forgotten" Travis Cartmel said a branch of the mortgage company AnnieMac in Indianapolis. This is known as the good old days.

But under the current rules, even if it has delayed payment on your loan, mortgage companies will always consider the amount that you owe. And they can be denied because it - no matter how good your credit score.

So I do what I did. Instead, try the following:

• Wait until the deadline has passed six months
• Consolidate your student loans before applying for a mortgage
• Find out what type of mortgage you can afford on their student loans above
• Ask schedule a payment based on income or a plan, at least do not eat a large portion of their income

While waiting, you can see all your accounts in order

The deadline may be the perfect time to work, credit cards and other accounts time to pay.

If you for a home loan, lenders have placed great emphasis on their monthly debt ratio to income. This should be under 43% are to qualify for most mortgages, but it is under 36% is ideal that you keep track of all your monthly bills to ensure - and to get the best deal on a loan.

Even if you have a boatful loans of students debt, the repayment of other bills can significantly reduce the debt to income ratio. And also have the added effect of your credit - to improve score, making it more attractive for all lenders (or at least viable) a.

Find a co-borrower, or save for a heavy deposit

If you have someone to their finances look better on paper to make to enjoy by all means.

Me? I am not so happy. My friend's salary as assistant no as "Sugar Mama." And although my real mother was willing to put money on a deposit that do not sign for a mortgage.

This payment is essential, however. Even with student loans, most lenders want to see 20% of the original purchase price. Some are willing to work for less if you pay extra each month for private mortgage insurance that the magic 20% of the shares to achieve. The buyer of a house Millennium average in 2015 could put only 7% down, but if you at least 10%, you will get a better price.

And remember, no money deposit, you must pre - also closing costs to pay for the necessary things such as an inspection, lender fees and title insurance.

Try FHA

For people with large student loan debt, Cartmel recommend an FHA loan, allowing a higher ratio of debt to income.

"Getting a Mortgage over $ 100,000 student loan can be a challenge, but the FHA can be a great help," he said.

But here's the problem: If you pay too little credit student, it can hurt your chances to get approved for an FHA loan.

FHA has its rules recently changed, so that even if the deferred student loan looks in the last 12 months and pay nothing FHA in balance of total credit and the number of outstanding students who pay to be a 2% each month.

So if you have in the form of loans $ 100,000, the FHA will want to have a loan monthly payment of $ 2,000 students, which means a mortgage beyond the reach of most people.

But the good news (and at this point you should have known that good news would be) is that when you have something as part based a payment plan on income payable, FHA uses this number to determine whether the meets requirements for a mortgage.

So here's the cheat sheet:

• FHA loans are great if you pay a reasonable amount of their student loans
• But FHA loans are a bad idea, if you have a high student monthly loan payment
• And FHA loans are almost impossible to qualify, if you have a lot of student loans, and no monthly payments due to Adjournment

Meanwhile, renounce my girlfriend and I rent for at least another year. Not exactly what I had in mind when he was a lawyer, but we found a nice one-bedroom in a nice area of ​​Chicago. And we deal our finances slowly soon a successful career in the property to make. Like the other adults.