Buying a Home Despite Student Debt

Whether you’ve just graduated or have been making those pesky monthly payments for a while, student loan debt can be heavy, burdensome and downright defeating.

The weight of Student loan debt doesn’t have to affect other areas of life – such as buying a home. If you’ve been dreaming about homeownership, but aren’t sure exactly how you can obtain such dream while having student loan debt, we’ve got some tips for you:

1. Talk to your Local Mortgage Pro for Advice

First and foremost, talk to a local mortgage pro as early as possible, whether you’re looking to buy a house this year or a few years down the road, to learn more about where your finances need to be to buy a home. Your mortgage pro will be able to tell about the different loan programs available, and what down payment assistance and other first-time homebuying programs may be available to help you achieve the dream of homeownership sooner, and more easily.

2. Don’t Neglect your Payments

There’s one simple rule you must follow: make your student loan payments on time, every time. Missing a payment or even making a payment late could hinder your credit score, which is a key factor in evaluating your home-buying readiness. As difficult as it can be to make those payments, it is important to understand the negative impact it can have on your financial future. Setting up monthly auto payments is a great way prevent any potential issues.

3. Focus on Building Good Credit

Having a good credit score is essential when applying for a mortgage. It provides your lender with a form of proof that you are a responsible borrower and good candidate to repay the loan. Work to build that good credit by staying below your credit card limits, making payments on time and swiping responsibly. Check out a few more tips on building and maintaining healthy credit.

4. Evaluate your DTI

DTI (Debt to Income) ratio is another important factor in determining your readiness to buy a home. Your lender will review your finances to determine your DTI by evaluating see how much debt you have vs. how much pretax income you are bringing in. Talk to your lender about your DTI to determine where you need to be to buy a home. Check out our step-by-step guide to reduce debt to get started.

Bottom Line:

If you’ve got student loan debt, you’re not alone. According to the Student Loan Hero website, about 45 million Americans currently owe more than $1.56 trillion in student loan debt. While it’s a burden to many, it doesn’t have to prevent you from achieving your dream of homeownership. Start working early with an Inlanta mortgage advisor you help determine your financial path to make it happen.

To learn more about the mortgage process or to find a mortgage advisor in your area, contact us today. Discover how we’ve already worked with borrowers like you to evaluate their unique financial situations and how we helped make their dreams of homeownership come true.

What Are Qualified Mortgages?


What Are Qualified Mortgages?

In essence, qualified mortgages adhere to a set of guidelines designed to protect consumers from entering into a mortgage they can not repay. Most lenders, including Inlanta Mortgage, already comply with the Qualified Mortgage regulations and document a borrowers’ “Ability to Repay” a mortgage loan.

Ability to Repay

The “Ability to Repay” (ATR) guidelines refer to information that lenders must collect and verify to ensure that the borrowers can repay a mortgage loan. For those familiar with the mortgage process, this information is already required by Inlanta Mortgage and other reputable lenders. For those unfamiliar with required mortgage loan documentation, these are the eight categories of information that must be documented and verified under the new ATR rule:

  1. Current or reasonably expected income or assets
  2. Current employment status
  3. The monthly payment on the covered transaction
  4. The monthly payment on any simultaneous loan
  5. The monthly payment for mortgage-related obligations
  6. Current debt obligations, alimony, and child support
  7. The monthly debt-to-income ratio or residual income
  8. Credit history

What Else Should I Know About Qualified Mortgages?

It’s important to note that the Qualified Mortgage regulations came about as a result of the housing market meltdown from which we are currently recovering. Before the meltdown, too many mortgages were made by unsavory lenders to consumers without regard to the borrowers’ ability to repay the loans. These new regulations were required by Congress, as a response to the financial crisis and nationwide foreclosure epidemic.

Besides the “Ability to Repay” documentation and verification, new rules also state that qualified mortgages have:

  • No interest only feature
  • No balloon payment
  • Amortization not to exceed 30 years
  • No prepayment penalties
  • Maximum debt-to-income ratios
  • No negative amortization
  • Limits on points and fees

What Does QM Mean To Me?

This is a great question and the answer depends upon your lender. As a mortgage banker, Inlanta offers more financing options than other types of lenders. As a mortgage banker Inlanta has the ability to deliver/sell loans to multiple investors with varying guidelines. For example, the maximum debt-to-income (DTI) is set at 43% except in cases where the borrower qualifies with agency automated underwriting approval. Since VA, FHA, Fannie Mae and Freddie Mac are exempt from this specific restriction with automated underwriting approvals – only lenders with access to these agency products can offer mortgage loans that exceed the 43% DTI maximums. Not all lenders have access to VA, FHA, Fannie Mae or Freddie Mac mortgage products.

Learn More About Qualified Mortgages

The Consumer Finance Protection Bureau (CFPB) has posted a wealth of information on the new Qualified Mortgage regulations. Most recently, the CFPB published Fact vs. Fiction, a paper that addresses some of the myths that are being pushed around on the internet. For more heavy reading, you can review the Summary of the Ability-to-Repay Qualified Mortgage Rules and the Concurrent Proposal here.

Contact a licensed mortgage loan officer at Inlanta Mortgage for more information. Use our branch locator to find a professional near you.

Our Mission Statement

Our mission is to be the home financing partner that you trust to serve your family, friends and community. Through our family of dedicated mortgage professionals our commitment is to deliver an exceptional experience. Our unwavering dedication to integrity, honesty and ethics is the foundation of all of our relationships.

About Inlanta Mortgage

Headquartered in Brookfield, Wis., Inlanta Mortgage was established in 1993. Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products, as well as a full suite of jumbo and portfolio programs. The company is an agency approved lender for Fannie Mae, FHA/VA, FHA 203K and USDA. Inlanta Mortgage also offers numerous state bond agency programs.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS #1016. Inlanta Mortgage is proud to be named to the Scotsman Guide Top Mortgage Lenders 2012 list and to be among the Top 100 Mortgage Banking Companies in America in 2012.