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Although the housing market has been pretty crazy over the past few years, more people than ever are looking to move from renting to owning their own home. However, if this is the first time that you’re buying a home, you might find it a real challenge to get the money you need in order to put a downpayment on a home and get a reasonable home loan.
Especially if you have a lot of student loan debt, like you might from going to medical school, it can be hard to find a mortgage loan with terms suitable for a new physician. So to help those who might find themselves in this financial position, here are three tips for a home while paying off student debt.
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Reduce Your Debt As Much As Possible
The problem with owing a lot of money on student loans is that this debt is added to all of the other debt that you may have accumulated throughout your life. And when you have a lot of debt compared to how much money you’re bringing home each month, your debt-to-income ratio can make it hard for you to qualify for a home loan or get good terms for a loan you do qualify for.
To combat this, you should try to reduce your debt as much as possible before you apply for a home loan. If you have smaller loans that have higher interest rates than your student debt, seek to pay off those higher rated loans first. The smaller your debt is when you apply for a home loan, the better your chances are of getting approved for a reasonable loan.
Look Into Assistance And Other Programs
For those who are first-time home buyers, or for people of various types of backgrounds, there are many different assistance or other financial programs available to help you in getting a home loan.
Some options you might want to look into could include assistance with gathering together a downpayment or special offers and programs available to people in your exact situations, like those who are purchasing their first home or have certain careers they just recently started.
Prepare For A Smaller Loan Or A Higher Interest Rate
Because you may not be able to pay down all of your student loan debt before you want to purchase a home, you may need to come to terms with the fact that you likely won’t qualify for the most ideal home loan. Generally, you’ll likely either have to settle for a smaller loan than you would prefer or accept a higher interest rate for your loan. While you can work with both of these factors, you may need to come up with a short-term game plan for how you’ll use this as a stepping stone for future financial progress.
If you have student loan debt but are also wanting to buy your first home, consider using the tips mentioned above to help you navigate your way through this financially.
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