As the recent graduation season will be sending many students from the confines of college out into the real world, many will be willing to venture into the real estate market. Whether you’re tired of renting or just think that it is time to settle down, the desire to transition into home ownership will be present in these next few months. However, student loan debt may be holding you back from doing so. Despite what you owe, there are still ways to come up strong in the real estate market, all the while keeping your credit score intact and student loan creditors happy.
Student loans can add up fast, and form a monumental debt to be repaid after only 4 years of school. You may think that this will stop a lender from issuing you a mortgage, but think again. So long as your DTI (debt-to-income) is lower than 36%, you will have lenders willing to hand you a mortgage, all backed by the U.S. Government. Although, we professionally recommend for a recent grad to have a DTI of 26%-30%, in order to account for some of the incidental expenses of being a homeowner (like repairs and upkeep).
Now, while you may be approved for a loan, tackling the down-payment will be the next challenge to face. Statistically speaking, recent grads, as a whole, do not have a lot of money saved up in their banks, and may not be able to foot the average 17% down payment on a home. Thankfully, for those who really want to purchase a home, the Federal Housing Administration will back a loan with only 3.5% down, leaving recent millennial grads flexibility in their home buying adventures.
All of this talk of home ownership and home buying will certainly have a millennial riled up to buy their own house, but in our opinion, we say it is better to wait. Better to wait until you are financially stable, with enough saved up for a sizable down payment, than to rush everything and defaulting later down the road. Homeownership can wait. For recent grads, renting may be the better option, as they can easily back out of it if they wish to move or if they get a better job somewhere else. Not only that, but renters do not have to face the expenses of upkeep and repairs—which can add up to a pretty penny in just a short while.
Now, if you’re still stuck in the middle, we may have a great compromise—condos. They will run you less than a full house, but they will also give you the independence of owning your own home. Perfect for the recent grad, he or she can easily sell the unit and move on to the next city if the need arises. To check out our condo listings, visit our website or give us a call today.
No matter what you choose or how you want to approach your housing situation, just know that we are here to help. From home buying to renting to condo financing and beyond, we are here every step of the way for you. It’s just another way we care for our clients, even after the sale! Come on in today to get started!