One of the biggest problems when it comes to buying a home today is that many people have existing debt. When applying for a home loan, mortgage companies are going to ask about existing debt. This comes in the form of student loans, credit card debt, other properties, and car payments.
This debt is largely seen as a major hurdle to those who are looking to buy a house. Sadly, student debt is becoming a major problem and countless graduates have thousands of dollars in debt.
Some people might even think this makes it impossible to purchase a home. Luckily, there is a way for people who want to buy a home with student loans to still purchase a house.
Programs Are Available Through Mortgage Companies
Fortunately, lenders have realized just how big of a hurdle it can be to purchase a home with student debt. That is why some programs are stepping up.
Those who have thousands of dollars in student debt (in their name) might be eligible for financing through mortgage companies.
These companies are willing to front tens of thousands of dollars that can be used in financing to pay off someone’s existing debt. This might even be enough to cover the entirely of someone’s student debt.
It is important to note that for most of these companies, partial loan payment is not permitted. The entire student loan needs to be paid off or listed in deferred status.
One of the major benefits of taking this path is that financing for student debt relief is given at a 0 percent interest rate. The loan is then forgivable after five years and repayment is not needed.
On the other hand, those who decide to move within five years will still need to be the remainder of the student loan balance. This is a fantastic option for those who have student debt yet would still like to buy a house. It can save recent graduates tens of thousands of dollars.
Discussing Interest Rates on Student Loans and Mortgages
One of the major factors that is going to play a role in this process is the potential interest rates on these loans. In general, the interest rate is going to dictate the size of the monthly payment (along with the total loan itself).
On average, the interest rate on any student loan is going to be higher than the interest rate offered on a mortgage. Therefore, the ability to pay off student debt through mortgage companies represents a major advantage for those with existing student debt.
Those who might owe hundreds of thousands of dollars in student debt have a chance to save thousands of dollars over the life of the loan.
Help for Students Looking to Buy Houses
Nobody believes that someone should be saddled with thousands of dollars of debt for simply trying to go to school.
Programs such as these present a unique opportunity for students to both jettison existing debt while also buying a house. This opportunity needs to be taken seriously because a house should not be seen as a loan instead as an investment.