Buying a Home with Student Loan Debt

Buying A Home With Student Loan Debt

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The class of 2017 graduated college with an average of $37,172 in student loan debt; that’s up 6% from the previous year.

In the coming months and years these students are going to find jobs, start families, and begin looking for their starter homes, with many of them still carrying a handsome amount of student debt. That fact alone will keep many of them out of the running for purchasing a home and postponing until they feel they have reached a better financial standing, but is this necessary?

Can young professionals still purchase a home with student loan debt, and if so, how?

Despite popular beliefs, having student loan debt will not prevent you from buying a home. In fact, according to a report published by the Brookings Institution, by the age of 35, about 50% of college graduates who carry loans will own homes. However, debt is the key issue when it comes to graduates and homeownership. Whether it’s false beliefs or actual truths, student loans are deterring a large amount of students from taking the next step.

Purchasing your first home is a milestone, an accomplishment that many strive for and it can be in reach for you, even if you are carrying the burden of paying back loans on your education. First things first, create a plan. Taking on a mortgage without first planning how you will handle all of your financial responsibilities is setting yourself up for a possibly stressful financial failure.

Regular mortgage payments and regular student loan payments, how do you handle both?

Let’s start with student loans. There are many government and even private loan institutions that offer payment plans that help with managing a lower monthly payment. Anything from debt consolidation to income-based payments could go a long way to making your payments manageable. With that being said, consulting with an adviser is always best since these programs aren’t always well suited for every financial situation. Choosing the program that’s best for you will set you up for long term success.

Next, mortgage payments. Your debt to income ratio will be a huge determining factor when choosing which type of mortgage you should obtain. Although the amount of your student loan debt could affect mortgage eligibility, all is not lost. Putting away enough money in savings so that you can put down a sizable down payment will help, or you could use that money to pay down loan debt to decrease your debt-to-income ratio.

What about my credit?

Don’t forget to maintain your credit. A great credit history is a key factor in receiving a great mortgage rate even if you have student loans; so remember to pay your bills on time and keep your credit utilization low.

5 Thing That- Can Drive Up Your Mortgage Rate

5 Things That Can Drive Up Your Mortgage Rate

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When applying for a mortgage loan, every borrower hopes to receive the best rate possible. However, many may not be certain what factors actually determine the rate they receive.

Check out our list below of the top 5 things that could be driving your mortgage rates through the roof!

1) Credit Score

This is a given and many are aware that in order to receive the best rate possible, your credit score must meet your lender’s credit threshold.

If your score is under that threshold, you could end up paying more interest as opposed to someone whose credit score is higher.

Check out our blog post on the 5 steps you should take to get your credit, mortgage ready!

2) Occupancy

If you are mortgaging a property that isn’t your primary residence, you could pay significantly more in interest.

Because second homes are riskier investments, interest rates reflect those risks lenders must take into account for negative possibilities.

3) Loan Amount

If your loan amount is really high or really low, you could pay more in interest. Loans over or under the conforming loan limit could possibly see raised interest rates due to lenders having to make up costs.

4) Down Payment

Generally speaking, putting down a higher down payment could make your interest rate lower. This is because the more stake you put into your future property, the less of a risk you become.

5) Type of Interest Rate

There are two types of interest rates: fixed and adjustable. A fixed interest rate stays the same whereas an adjustable rate changes based on the market.

You typically can get a lower adjustable rate; however, over time that rate could go up or down.

To new grads

To New Grads: Now Is The Time To Start Thinking About Buying A New Home

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I know what you’re thinking, you just received your diploma and may not even have your first job lined up prior to graduation yet, so isn’t thinking about buying a home a bit premature?

My answer to that question is a big resounding NO.

Now is the best time to start investing into your future; the sooner the better. I don’t mean today is the best time to go out and purchase your first home, but what I am saying is that you should be thinking about the cost of a home and mortgage and begin prepping financially.

Buying a new home takes money so it’s best to be proactive.

Before we talk about saving for a house, we must first mention the dreaded topic many new graduates have pushed towards the back of their mind. Debt. 66% of new graduates from public institutions are graduating with some amount of student loan debt. That’s reality. Carrying student loan debt doesn’t automatically disqualify you from homeownership, but you will need to create a loan payment schedule in order to reduce your debt to income ratio.

Next on your financial prep checklist is building your credit history. Responsible use of credit will be important when applying for a mortgage loan. If you’ve had credit before and made some errors or have never had credit, now is the time to start cleaning up and building. Pay off credit debts and use a card or small auto loan to make regular payments that show you know how to handle money and make wise decisions.

Eventually in your near or far future you may want to put down roots and purchase your first home, and the steps you take now while you’re young will set you up for the best possible scenario in your mortgage and home options.

Why It’s Important To Get Pre-Approved

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Beginning the process of looking for a new home can be a daunting task and for many first time home buyers, knowing where to start can be confusing. You may be asking yourself “how do I go about paying for a house?” or “how much home can I afford?” Well, both of those questions can be answered after getting a pre-approval.

What’s a pre-approval?

It can be difficult for the average person to pay for their home with cash. So, how do many people buy a home? Well, the answer is quite simple and many individuals go this route every day; apply for a home mortgage loan.

At AmeriSave Mortgage Corporation, we’ve made this process simple, offering online services that allow you to go through the loan process from the comfort of your living room.

Obtaining a pre- approval is one of the first steps you should take in your home hunting process. A pre- approval can assist in your house hunt because you learn just how much of a loan you qualify for and that makes home shopping easier. Not to mention, sellers will view you as a serious buyer and this could put you in good standing in their eyes when you begin to make bids on a home, especially if there are multiple offers.

Four tips on negotiating a home purchase price

Four Tips On Negotiating A Home Purchase Price

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For many inexperienced homebuyers, negotiating a final sale price can seem rather intimidating. Every homebuyer wants to make an offer most in their favor, which is why proper negotiation plays such an important role in the process. Here are four quick tips to help you get started on negotiations.

1. Understand the seller.

Perhaps the most important component of any negotiation, understanding your counterpart helps you estimate how much leverage you have and how low you can make an offer. If a seller is eager to sell the house as quickly as possible, you should stand firm in your negotiations and stress your willingness to buy the home immediately.

2. Research home prices in the area.

Before entering into any negotiation, you want to be sure that you have access to all useful information. In real estate, the average price of surrounding homes provides a reliable starting point for negotiations and helps you pick out houses that are listed well above market value.

3. Keep your options open.

All too often, first time homebuyers fall in love with a property and end up giving away far too much in the negotiation process. Instead of putting all your eggs in one basket, keep several options in mind. Not only will you avoid becoming locked in to one property, but letting the seller know about other properties of interest can give you leverage in a negotiation.

4. Don’t let ego get in the way.

By their very nature, negotiations require a certain level of competition between the two sides. As such, it is important to stay focused on buying a home at a favorable price and not let ego get in the way of common sense. Instead of insisting on a maximum price and risking losing the home, stay focused on the property itself and consider whether or not the price fits into your budget.

Get Your Credit Mortgage Ready

Get Your Credit Mortgage Ready!

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If you’re considering buying a new home, then you’re probably aware of the criteria that factors into obtaining a mortgage loan. However, one of the many standards that concern most individuals is the shape of their credit.

Your credit does affect your loan eligibility and rate, that’s why it’s important to take steps in order to improve your report/score before submitting an application.

Check out these 5 steps so that you can have confidence when applying for your next home loan!

  1. Check your credit report

Okay, first things first, check your credit report. You’ve probably heard this advice many time, but there is a reason it is the first step you should take; credit reports may have mistakes. In fact, according to a report by the Federal Trade Commission, 1 in 5 Americans have an error on their credit report. Those aren’t the best odds. Spending time once a year reviewing your report to confirm there are no errors can increase your score and ultimately save you money; better scores typically equal better rates.

  1. Pay down your debt

You’ve probably heard of this little thing called debt-to-income ratio, and if you haven’t, get acquainted with this term. Basically, your debt-to-income ratio is the total of your monthly debt payments divided by your monthly gross income. The higher your ratio, the bigger risk you are to a mortgage lender because you’re less likely to be able to pay your monthly mortgage bill. Paying down debt and paying off collections will also be good for you in the long run because it’s less monthly payments you have to make on top of your mortgage.

  1. Don’t over utilize your credit

No matter how high the limit is on your credit cards, utilizing a high percentage can have a negative impact on your credit. A good rule of thumb is to keep your utilization under 30%, so if you had a credit card with $1500 limit, you wouldn’t want to spend more than $450 at any given time. Also, if you can afford to pay off your credit cards in whole every month, that can help boost your score.

  1. Diversify your credit lines

This may seem counterintuitive, but with responsible managing, having several forms of credit lines can improve your credit. A good mix of credit cards and loans that you make regular, on-time payments with low utilization shows lenders that you are responsible with your debt.

  1. Get some credit

For many, the world of credit cards and personal loans seems daunting and scary, so they opt out of dealing with any form of credit at all. However, building a credit history is important if you plan on purchasing a home with a mortgage. The older your credit history the better, so start building soon. Secured cards and small loans are good starting places. If you’re still unsure, ask a financial professional for help.

 

If you already follow these steps, then you’re on the right track and may be ready to venture into home ownership. Check out our rate calculators and get your no obligation quote today!

homes are selling fast this spring

Homes Are Selling Fast This Spring Season

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With demand so high and supply low, it’s no wonder houses are selling faster than agents can set up showings with their clients. This spring we are definitely in a sellers’ market; home prices have gradually increased and show no signs of stopping and yet buyers are still swooping in and purchasing homes.

According to new data collected by Redfin, sales have jumped by 9% compared to this time last year. This competitive market is creating a lightning fast environment for home sales with houses selling at an average pace of 8 days faster than the previous year.

Fast home sales and low supply means that agents and buyers have to be prepared and on their A-game in order to compete in the fast paced market. First time homebuyers will face some of the toughest challenges when searching for affordable homes since builders are having trouble keeping up with demand for starter homes.

A seller’s market is great for business for many real estate agents as buyers attempt to stay competitive and find insider help, and leverage market connections. Buyers know, or will soon realize, that this is not the market to go at it alone, and using an agent will give them a competitive edge when attempting to sway sellers in their favor.

Spring has sprung

What To Expect When Purchasing A Home During The Busiest Time In Real Estate

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With the blossoming of new flowers, for sale signs are also blooming across the country; spring homebuying season is up and running. Despite rate increases, it’s still a sellers’ market for Americans in most of the U.S. Yes, 2016 was a great year for mortgage rates, seeing rates hit record lows; however, with rates lingering in the 4% range, historically speaking, we’re a far cry from saying rates are bad. In fact, comparing rates over the course of the past 50 years, a rate below 5% is really great, even by today’s standards.

Spring time real estate sales are projected to boom this year, but low inventory will definitely present a major increase in demand. So, what does this mean for buyers? Well, the simple answer is homes are selling faster than ever. In fact, homes are selling at an average of 8 days faster than the previous year. With that being said, while conditions are great for purchasing a home, finding one to buy may present problems. You will have competition, even more so with the projected increase of millennials entering first time homeownership this year.

Don’t let the lack of supply discourage you though. Our economy is on the rise and has been for some time; that fact, coupled with job growth and still low rates creates a landscape for optimal selling and buying potential. However, it does make it more important than ever to do your research and ready yourself with a great mortgage lender. You can visit amerisave.com and apply for a pre-approval so that you have a gauge of how much home you can afford. The market is competitive

Why millennials are delaying homeownership

Why Millennials Are Delaying Homeownership

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Homeownership, once the milestone many young adults strived for to prove “they made it”, has seen a steady decline from the younger millennial generation. There have been many reports and articles about millennials and their “unusual” buying behaviors; many claiming that this generation simply is changing the narrative of what it means to attain the American dream. Although that may very well be true, in the case of delayed homeownership, there may be an even simpler reason behind why this generation is opting out: affordability.

Low housing inventory has been an issue and on many industry insiders’ radar for quite some time now, but the supply of starter homes is even more stark which makes home prices rise. This fact is knocking many millennials in competitive markets out of the running. Another contributing factor to the home buying delay is credit history. According to data collected from TransUnion, about 38% of millennials fall into the subprime credit category meaning their credit history/score is below average. Being a high risk borrowers makes housing affordability even more challenging because the borrower usually has to apply for loans with higher interest rates and less favorable terms.

With all that being said, millennials may be delaying homeownership, but that doesn’t mean they aren’t planning on ever purchasing a home. The job market is stable and people’s overall incomes are on the rise. As the younger generation continues to take steps to improve their financial situations and (hopefully) as inventory starts to catchup with demand, we will begin to see more millennials take the next step into homeownership.

Why Is Spring The Best Time To Sell A Home?

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In real estate, as in many other things in life, timing is everything. For many homeowners and prospective home-buyers, the decision of when to buy or sell a home can have a tremendous impact on the price, ease of sale, and competition. Many professionals in the real estate sector point to spring as the start of the busy season. This means that more houses will become available for purchase and more buyers will start looking at available properties.

The spring season brings with it an increase in real estate activity for a number of reasons. As the expensive holiday season becomes a distant memory, you might find yourself with more money in your pocket and start to become excited about a new project. Spring also means more sunlight and warmer weather, which to many people is a major motivator to finally get started on the home buying or selling process. Buying a home in the spring also lets you look forward to a summer moving project; a far better prospect than moving in the dead of winter.

So why should you consider selling your home in the spring? For starters, the boost in foot traffic at open houses increases the likelihood of multiple offers, which gives you the leverage necessary to negotiate a higher sale price. The spring weather also spurs the growth of plants and flowers, which can significantly improve the aesthetics of your home and ultimately allow you to ask for a higher price. Because spring marks the beginning of the “real estate season,” home-buyers will be nervous about missing out on a home that catches their eye, and this  can entice them to agree to a higher price.

That being said, this spring we’re gearing up for another active home-buying season.  If you’re shopping for a new home, don’t miss out.  Shop some of the most competitive rates and lock yours today. Click here for today’s rates.