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Whether you’re a recent college graduate considering homeownership or a long-time renter who’s been whittling away at your student debt, there’s a lot to consider in regard to your student loans and how they may affect your ability to buy real estate.
How Student Loans Affect Your Credit
When you take out student loans, your loan balance (or the amount of student loans you have) doesn’t affect your credit score. Instead, what causes your score to go up or down is whether you’re making payments on time or missing payments.
If you’ve missed any payments, now is the time to create a budget to ensure that you make regular payments on your school loan. Keep in mind that it can take up to seven years for that missed payment to come off of your credit report.
Student Loans and Buying a Home
When you apply for a mortgage loan, your debt-to-income (DTI) ratio is one of the main factors that lenders take into consideration. DTI compares your total recurring monthly debt with your total monthly income. Making timely payments on your student loans strengthens your FICO® score, which makes you more likely to be approved for your mortgage loan.
In order to calculate your DTI, add up your recurring monthly debt and divide it by your gross monthly income.
In general, lenders want to see a DTI of 43% or less before they approve a loan. However, some lenders will look for a DTI as low as 36% before they consider lending.
More than half of non-homeowners say their DTI keeps them from qualifying for a mortgage. To keep this from happening from you, create a financial plan that allows you to chip away at your loans at a pace you can handle. You may surprise yourself at how much of a dent you can make in your loans by making regular payments.
By understanding the way student loans affect credit, you can act on that knowledge and work toward getting approved for a mortgage loan, even with student debt on your credit report.
To help young professionals, including those burdened by student loan debt, better understand the homebuying process, Lennar has launched new workshop series called Make Your Move. Click here to learn more about this innovative program and RSVP for the next event today!
Lennar, the nation’s largest homebuilder, is thrilled to offer a diverse collection of home designs for sale in the Spring Hill area. Sawgrass is a brand new community featuring the Classic Collection of homes, and is NOW SELLING five distinctive home designs. Sizes range from 1,800 to over 2,500 square feet or living space, with up to four bedrooms, and three bathrooms. Prices start from the high $200s.
Spring Hill is a serene, and quickly growing city located about 30 miles south of Nashville. Spring Hill is in HIGH demand, and you will find a wide range of parks and outdoor recreation, festivals, events, and a rich history. For those looking for a small town feel with the conveniences of a city, then new homes in Spring Hill are perfect!
Every new home Lennar builds is part of their signature Everything’s Included® program and showcases a high level of standard features that come at no additional cost. The new residences feature Wi-Fi CERTIFIED™ home designs for whole-home internet coverage, stainless steel appliances, quartz countertops, integrated home automation products and more – all as standard.
Model homes are open for Sawgrass seven days a week at the Welcome Home Center, located at 109 Southwind Run in Spring Hill – directly off Tom Lunn Road. For more information, visit www.lennar.com/new-homes/tennessee/nashville/spring-hill/sawgrass/classic-collection, and call our Internet Sales Consultant, Erin, to schedule your tour at (615) 236-8076.
About Lennar
Lennar Corporation, founded in 1954, is one of the nation’s leading builders of quality homes for all generations. Lennar builds affordable, move-up and active adult homes primarily under the Lennar brand name. Lennar’s Financial Services segment provides mortgage financing, title insurance, and closing services for both buyers of Lennar’s homes and others. Lennar’s Rialto segment is a vertically integrated asset management platform focused on investing throughout the commercial real estate capital structure. Lennar’s Multifamily segment is a nationwide developer of high-quality multifamily rental properties. Previous press releases and further information about Lennar may be obtained at the “Investor Relations” section of Lennar’s website, www.lennar.com
