At Fafard Real Estate we work closely with several Mortgage Lenders. Being in the housing market myself as a potential first time home buyer, I have concerns about being strapped down by student debt and if it will prohibit me from buying my own home. As a result, in an effort to educate myself and others, I asked for some advice on the do's and don'ts of being a first time buyer.
In regards to potential home buyers with student loan debt:
- Always make your payments on time - This is true for every payment you have: student loans or other, credit cards, personal loans, utilities, car, etc. Making your payments on time increases your credit and you are going to need a good credit history to get an affordable mortgage loan.
- Refinance the terms of your student loan payment options (prior to applying for a mortgage) to achieve the lowest monthly payment. This allows you to keep making your payments on time while saving money to put toward your new home. Higher payments mean that you might not always be able to pay them, it will take longer to pay them off but it will ensure you are always on time. Higher payments also could be interpreted as you having less cash flow meaning that you cannot afford more payments and therefore, you will not be granted the mortgage that you are seeking.
- Defer the repayment period for as long as possible. This allows you to have time post-graduation to find a steady job and get your feet under you before it's time to start making payments, plus it hopefully allow you to save a little.
- Do not establish any new debt prior to applying for a mortgage. Debt is a liability to the bank. The more debt you have, the less money you have to go around and the bank will be concerned that you will not be able to make your payments.
For more advice and tips, reach out to me at bbancroft@fafard.org! I can refer you to our network of Mortgage Lenders.
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