If you graduated college in debt, you might feel as though you have to pay rent forever. Fortunately, life doesn’t have to be this bleak. While student loans are an aspect of the payments you make each month, they do not necessarily have to prevent you from getting a mortgage.

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How can you make a student loan work to your advantage?

MAKING PAYMENTS ON TIME

Student loans are all bad – they allow you to establish credit at a period when your credit history is all but non-existent. Once student loan payments are made (post-deferment period), you will be able to begin building credit.

When payments are made on time, good credit will be built. Future creditors will be able to see that you are able to manage debt, and are responsible when it comes to repaying what you owe. As the balance continues to be paid down, credit history will be billed further. If other types of trade lines are non-existent – particularly one associated with housing – then student loans may help a lender come to a favorable conclusion about your financial responsibilities.

SHOWS YOUR ACCOUNTABILITY

Occasionally, a student loan keeps borrowers cognizant of the things they can actually afford. It doesn’t take much for someone to find themselves in over their heads when mortgages are involved. People see the maximum amount they are capable of borrowing and take it. However, the reality of the situation isn’t apparent until large payments need to be made.

If student loans are something you have, be mindful of other payments you are making alongside one. You must determine how mortgage payments will affect other payments you are responsible for. Although it could restrict your affordability, either by a little or a lot, your mortgage payments will be at the expense of other bills. The mortgage payments you make each month will be the only expenses you are responsible for. Student loan awareness can prevent you from overwhelming yourself.

INSTILLS CREATIVITY

Based on how much your student loan amount is, down payments could be troublesome to secure. If all the income you earn is allocated to bills, then the down payment you make will likely be quite small. That’s why a lot of people make the false assumption that they cannot afford a mortgage. What they should be doing is getting creative.

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Begin with a government loan, like an FHA loan. The credit score required will need to be 580 and up. The down payment amount you make will be 3.5%, which isn’t very much. If you were to purchase a home that costs $150,000, then your down payment would be a mere $5250. It is okay if you do not have an amount that big. If someone is open to gifting you at down payment, then you are welcome to accept it. You are not required by the FHA to put money of your own down if your credit score is 580 or up.

If an FHA loan isn’t suitable for you, consider getting a USDA loan, as down payments are required for them. Veterans are encouraged to explore VA loans, which also don’t require down payments. Ultimately, if you need other options, there are some available to you if you know where to look.

TESTS PATIENCE

Mind you, at some point, a little patience may be required if a mortgage is needed due to the amount of your existing student loans. Those who find themselves in over their heads should think about loan refinancing or getting some help. Many federal programs can either defer payments or have them prorated, depending on what your income is.

If you are not eligible for mortgages yet, wait a while. Continue to make bill payments punctually and build up your credit score. Put away all the money you can in the meantime. At some point, you will be approved for a mortgage. It might not happen as soon as you graduate college, because the student loan amounts you have will be still significant and you. However, if you remain diligent and that hair to your responsibilities, your time will eventually come.