Should You Buy a House if You Have Student Loan Debt?
September 25, 2020
Buying your first home is exciting… but it can also jangle your nerves. A mortgage is a big investment, especially if you already have student loan debt. However, that doesn’t mean you have to rent forever. In fact, you may save and even earn money in the long run if you buy. To see if it’s possible for you, consider these points:
Homeownership is an investment
Renting provides certain freedoms and may be cheaper in the short term. However, when it’s time to move, renters have nothing to show for all the money they sank into their unit. Homeowners, on the other hand, gain equity over time (as long as their home value appreciates). By renting, you may actually be losing money, which could make paying down your loans more difficult in the long run.
Find extra ways to save
If you’re committed to buying a home with existing debt, you can always find extra ways to save. With some creativity and dedication, you may be able to trim back monthly expenses. Whether it’s cutting the cable cord, controlling impulse spending, or starting a side hustle for extra income, it is possible to take on a mortgage and a student loan at the same time.
Your credit score matters
When it comes to applying for any loan, your credit score can be a deal breaker. It’s especially important if you already have debt. Lenders are more likely to approve a loan for applicants who’ve consistently paid their debt down. If your credit isn’t quite where it needs to be for approval on a mortgage right now, you can always work on it. Continue to make payments on your student loan while keeping credit card balances low, and you’ll likely see your score improve.