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Got Student Loans? You Can Still Get a Mortgage!

The cost of college has increased over the past decades. Studies show that most 2017 college graduates have over $38,000 in student loans. Yes, this can feel like quite a burden. Especially when you are just starting out in life and your career. Fortunately you also can qualify for a mortgage to own that first home you’ve dreamed of.

Lots of college graduates now are feeling quite frustrated with how student debt has given them a really tough start to their career. But you don’t need to let it limit you. In some ways, by having student loan debt you have likely learned a lot more about being serious with money than other recent college graduates from previous generations. So your money management skills long term will be much stronger and stable as your income rises.

Here are some things to do, as you start to consider if it’s time to get a mortgage. This is whether you are getting your own place, or with friends or even with a partner/husband/wife:

Sometimes you’ve had a parent or family member help you with your student loans. You’ll need to start by getting records of which payments you have made and the ones they also have made.

Understand how many student loan payments are due. Know exactly what your payments are. Do you know what the total amount is that you owe your college or university?

Under some circumstances, there are loan forgiveness programs. If you get a job with the government that is in high demand or into a program that offers this, typically they will let you know upfront that this is available. Some programs may forgive part of your student loan and others may take care of it all, it depends on the individual circumstances and the company or agency. But if student loans are a serious concern, we recommend you make the effort to look into this option as it can be helpful.

Be realistic about the mortgage that you can take on while paying student debt. Most personal finance experts recommend considering that your mortgage be approximately 35% of your monthly budget. If you’ve gone through undergraduate school and then straight to graduate school, your student debt totals may be quite high. So for now, the mortgage percentage in your budget could be a bit lower. But because of your education, in the long-term your earning potential is likely quite promising. So the mortgage that you get today may be quite different than the one you get 3 or even 5 years from now!

Know how your credit score works. Some college students and recent grads are quite savvy about a lot of things, including quantum physics, but they don’t realize how their credit score works in relation to their ability to get a mortgage. To put it simply: this score lets a creditor determine if you are a good candidate to lend money. A score to aim for is 700, which is considered a good score. One thing you’ll especially want to do is to pay all of your bills on time. It can be quite easy to misplace a bill or to get busy, but when you miss payments this is reported to your credit agency. This in turn, affects one’s credit history and credit score, both are things which a creditor will look at.

Think now about putting equity into your home. This is something that most homeowners do as they are preparing to sell. If you start thinking with the end result in mind, then you will constantly be protecting your investment. Over time, if you add several or quite a few improvements then you can feel confident that when it’s time to sell you’ll get a higher price for your home. That’s something every homeowner wants to do. Caring for your home all the time is a lot simpler than rushing around and doing a few “quickie” projects with the hopes of raising the price when you put it on the market. Remember that this is your first home, it will always be special to you. You can earn from its sale and get an even grander home the next time you get a mortgage!

Here’s What You’ll Need to Have to Apply for a Mortgage

Are you looking at your dream home? The 2008 recession made homeownership a challenge for some. By 2014, 64.5% of the U.S.A. population are proud homeowners. That’s quite a few people putting out a welcome mat and getting to know their neighbors!

If you’ve got your eye on a great house, it’s important to understand exactly what you’ll need to do in order to apply for a mortgage. For the typical application, they will ask for these details:

Your credit score, credit history & any issues you’ve had with your credit history in the past 5 years.

How much money you can provide for a down payment.

Your monthly income. If you are a couple, they will ask you each for your monthly income.

Your monthly expected debts (these could include car payments, credit card payments and student loans)

An amount for the house you can expect to afford.

Step #1: Start by sitting down and determining your monthly income. If you are a couple, both of you need to bring your financial information together, to total it. Look first at the expected money you have each month that is coming in. Next, understand how much money you pay on regular monthly debts. Get your records together which show both your income and your debts. These can include:

Income:

Pay stubs

Checks for contracting/freelance work

Money you receive monthly from investments

Expenses:

Car payment

Credit card payments

Utility payments

Groceries

Medical insurance

Student loans

Step #2: Now order your credit report from the 3 major reporting agencies. You can do this once a year for free. You’ll receive your credit reports from Experian, Equifax and TransUnion. To obtain a mortgage, you will feel most confident you will get a reasonable interest rate and good mortgage if your credit score is close to 700.

Today, most couples understand that it takes a bit of time to prepare to purchase a home, get a mortgage and get everything together. Take heart if you are looking at this information and your credit score is not 700, as there are things you can do to improve it. Start by making sure that you pay all of your bills on time. Work to pay off any debts that you have and request creditors report these to the 3 agencies, this will help your score.

Step #3: Plan to save for a down payment. While most mortgages can help you pay for most of your home costs, typically you are expected to put a cash payment on a home. There may be opportunities to purchase a home without placing any down payment, but this can often depend on the individual situation also with the home seller. It is wise to plan to put something down, as this gives you the most options when looking at homes. Consider viewing homes that are similar to what you hope to buy, and asking what a down payment would be for them.

Step #4: Determine your mortgage budget. While many home buying experts recommend that home buyers keep mortgage costs to about 35% of your monthly budget, in some communities this is difficult. If you are looking in a premium area, such as Honolulu, Hawaii or Dallas, Texas or New York, NY then quite likely your mortgage costs are going to be a much higher percentage of your budget. What is far more important, is that you feel comfortable with the amount your mortgage will be and the percentage that it is in your budget.

Do remember that for most homebuyers, a mortgage is a long term investment. You will be in this home for 10 years, 20 years or even longer. So do consider what other life circumstances might occur during this time and money you might need for other purposes. Would you need more money to help send a child to college? Are you nearing retirement age and will have less income? Keep in mind that there may be the option to refinance your mortgage in the future to save money.

Step #5: Prepare your paperwork and meet with a loan officer to submit your application. For some, preparing the paperwork can feel like a bit of a challenge. Some people are very organized and they save every single credit card statement they’ve ever had. Others never hang on to a receipt or document, they just don’t like the clutter. But your mortgage loan officer is going to want to see all of your documents, in print, right in front of them. What will be even more helpful is if you make several copies of all of your documents. This way if something gets misplaced during the process or you need to apply at another company, you’ve got everything you need with little fuss.
One of the best things about getting all of your documents together to apply for a mortgage is it can make you realize exactly the type of house that you can afford. It’s easy to dream and look at a pretty home and to say, “Oh, I want that one!” But if you don’t realize exactly what falls within your budget, then you may not realize that the much nicer, bigger home next to it is one you could afford too.

Get excited as you prepare to apply for a mortgage. This is an important step on your way to homeownership. Soon you’ll say, “Welcome to our home!”

Is Now the Time to Get a Personal Loan? How to Tell

Are you thinking about getting a personal loan? Sometimes an individual, couple or a family reaches a point where they need or want something that their regular budget does not have room to pay the full amount. But how do you decide if now is the right time to obtain a personal loan? Let’s discuss personal loans and several practical ways you can discern when is exactly the ideal time to sign on the dotted line.

Start by focusing on what you need the loan for. Do you realize that you just “need more money” or is it funds to reach a specific goal. We’ll admit that when a borrower has a specific goal in mind, they are often much more successful at obtaining their loan and also feeling confident they can pay it back. You may look at your home right now and think you would like to do some renovations. But when you’ve done some research, talked to home repair experts and determined which projects you want to work on over the next six months then you’ve got a plan that’s much easier to work with. Remember that once you’ve taken care of that personal loan, you can always return to the lender for another one for other repairs you’d like to make.

Whenever you apply for a personal loan, it’s critical that your credit score be as good as it possibly can be. Here are the ratings to aim for:

Excellent credit: 760+

Good credit: 700+

Fair credit: 640+

So what should you do, to prepare for loan application? Start by ordering a free copy of your credit scores. You can get them from the 3 credit agencies, Equifax, Experian and TransUnion once a year without it affecting your credit. Do keep in mind that if you repeatedly check your score, that it may have a negative effect on your credit.

The very first thing you should do is double check the contact information on the report. Confirm they have the proper spelling of your name, date of birth, social security number and mailing addresses that you have had most recently. Once you are confident this information is correct, read through the credit reports, with a yellow highlighter in your hand. If you see anything on your credit report you have a question about or need to improve, circle it with the highlighter. Perhaps you realize there is a bill that you did not pay in full several years ago, that now appears on your credit report. If you see bills you recognize which are unpaid, contact the creditors and make arrangements to pay them. Do remember it can take several months for a positive mark to appear on your credit report for that creditor. If you see anything from a creditor that you do not recognize which you believe is an error, contact the credit bureau immediately.

Take a look at your budget before signing up for a personal loan. Yes, a personal loan can help you get what you need and many are quick to sign up. But it’s important to realize that you are signing a legal agreement to pay the money back. When you’re about to get a personal loan, it’s time to take a hard look at your budget. Perhaps you realize that your family of 3 is about to welcome a new baby. Your current apartment is too small and you’d like to find a new place. That you dream of getting a big house with a yard where the kids can play. So you’re ready to look at a mortgage. Now you want to look at your budget, to see if you can make monthly mortgage payments with confidence. This is an important step, and will actually help you in the long run. You may realize that because you’ve decided to stay at home with the baby for the 1st year, that you have more expenses than realized and a mortgage will need to wait until the baby is about a year old. But you’ve made the wise decision by crunching the numbers, as now you can prepare for your dream home and plan for this goal with confidence.

Comparison shop for your best monthly payments and interest rates. This is something that a savvy borrower does and that we highly recommend to you. Some feel so frantic about wanting to borrow money, that they race to sign on the dotted line. But had they looked at a few more companies, they might have found an interest rate that was 3% lower. Why not put money right back in your pockets? For one thing, that savings can certainly help you pay the loan back quite a bit quicker.

Many individuals and families agree that taking out a personal loan is one of the best things they’ve done long term to build equity for their family. When you think out this decision and plan wisely for the future, it can help you a great deal. Personal loans offer you a great advantage when you otherwise might not have the funds immediately available to afford to purchase something outright.

What’s equally valuable is assessing if now is the right time for you and your family to take on a personal loan. Sometimes the timing is just perfect. Sometimes, just waiting 3 months can be what you need to be ready to sign on that dotted line!