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 a significant debt 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 a significant debt – but 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 beginning to build 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 continually updated. If you don’t have any other types of credit – particularly anything 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 awareof the things they can and cannot 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 already have, be mindful of all of the payments you are making.  Be sure that you can afford your mortgage in addition to all of your monthly expenses.

INSTILLS CREATIVITY

Sometimes it might be hard to accumulate enough money to make a good down payment on a home if you are continually paying bills and are unable to save.  A lot of people think that they can’t afford a mortgage, but what they need to do is get creative.

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Begin with a government loan, like an FHA loan. The credit score required for an FHA loan will need to be 580 and higher. 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’s okay if you don’t have it. If someone is open to gifting you adown 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 higher.

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. There are also other options, you just need to know where to look.

TESTS PATIENCE

At some point, a little patience may be required if you are trying to secure a mortgage and you have existing student loans. Those who find themselves in over their heads should think about student loan refinancing or getting some help. Many federal programs can either defer student loan 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 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. However, if you remain diligent and stick to your responsibilities, your time will eventually come.