The role student loans play in denying would-be buyers from getting into a home of their own has grown to staggering levels. According to the 2018 Homebuyer Profile report from the National Association of Realtors®, “Almost one in four homebuyers this year had student loans, which made it harder for them to save for a down payment and delayed their purchase,” said USA Today.
“Among buyers rejected for a mortgage from a lender, 40 percent had college debt, the NAR found.” Per the same study, 80 percent of millennials don’t own a home, and 83% of those non-homeowners said student loan debt was a barrier to buying.
The NAR found that “Two in five buyers, like Jodi Meyers, cut out luxury or nonessential items to save up for a home,” said USA Today. Her family, in the midst of paying off Meyers’ $55,000 in student debt, cut out all necessities and purchased outside of their preferred area to be able to afford a $249,000, four-bedroom home in Lakeland, Florida. The upshot: “It’s not my dream home, but it got my foot in the door, and now I’m building equity,” she told them.
Of course, compromise is nothing new when it comes to buying a home, especially if it’s your first. Few of us can go out there and purchase the waterfront mansion of our dreams, but that doesn’t mean we don’t aspire to do so someday from our starter home in the ‘burbs.
Check out a site like Student Loan Hero and you’re going to read about things like front-end ratios and back-end ratios and it can all get very confusing. And, the truth is, the average person doesn’t need to know the nitty-gritty. The important takeaway is that, in your lender’s…