Buying a home is a major investment that requires strong financials. If you have a large amount of student loan debt, you may find it challenging to purchase a home for many reasons. From saving for a down payment, to qualifying for a loan, to affording monthly mortgage payments, student loan debt can play a significant role in your ability to buy a home.
One factor that plays a part in how likely a lender is to approve a mortgage loan is the amount of debt you currently have. Lenders prefer that borrowers have minimal debt since taking on more loan payments increases the possibility that borrowers will default on at least one of their loans. The lender will compare your debt with your income, which is known as your debt-to-income ratio.
When a lender goes to calculate your DTI ratio, they will add up your debt from all sources: rent/mortgages, car loans, personal loans, credit card payments, student loans, child support, alimony, etc. Then they will divide that sum by your gross monthly income (before taxes) to see how much of your income is going towards these payments. You can do this same DTI calculation on your own to see where you stand.
If you have a high amount of debt and a low amount of income, your DTI will be relatively high. For a conventional home loan, it's best to have a DTI of 40% or less. If you apply for an FHA loan, you can be approved with a DTI up to 50%.
If you want to improve your DTI ratio, there’s no easy way around it, you will have to spend some time paying off your debt. It's also possible to reduce your DTI ratio by refinancing your student loan. However, this option will place a line of credit on your credit report, which means that you should refinance at least six months before applying for a mortgage. The positive payment history that occurs in the interim will offset the initial drop in your credit score.
Having a high credit score increases your chances of getting approval for a mortgage loan and securing a low interest rate. Your payment history is around 35% of your credit score, which means that a lengthy history of on-schedule debt payments is necessary. If you make your student loan payments on time every month, this should improve your score.
Saving for a down payment
If you are spending a few hundred dollars each month on student loan payments, you may be unable to save enough money for a down payment. While a down payment of 20% is recommended when purchasing a home, it isn't always needed. There are various programs and methods to purchase a home with a down payment of just 5-10%. An experienced agent like myself can talk you through all the options.
If you have student loans that you are currently repaying, buying a home will likely be more challenging. However, approval for a mortgage loan is more likely if you can reduce your DTI ratio, continue to make on-time payments, and you set your sights on an affordable home.
Home Cleaning Hacks
Keeping your home clean and tidy can feel like an impossible task no matter the size of your home. Whether you’ve run out of cleaning solution, want to reduce clutter, or just want a faster/easier way to clean odd spaces, here are some handy hacks to try.
Create Your Own Window Washing Solution
Cut through the grease and grime on your windows with three simple ingredients. Grab an empty spray bottle and add 2 1/2 cups water, 1/4 cup white vinegar, and 1/2 teaspoon of dish soap. Optional: add a couple drops of essential oil for scent. Shake well. Spray your fast-acting cleaning solution on any glass surface, then wipe clean with a microfiber cloth to avoid streaks – a coffee filter works as a lint-free wipe too.
Use Mouthwash to Clean Your Toilet Bowl
Out of toilet bowl cleaner? Skip the store trip and extra cost and consider using mouthwash instead. Simply pour 1/4 cup of basic mouthwash into your toilet bowl. Let it sit for 30 minutes, then scrub the bowl to get rid of any grime.
Use a Pillowcase to Clean Your Ceiling Fan Blades
Ever switch off your ceiling fan after months of running non-stop and find yourself astonished by the pile of dust and grime on the blades? Fortunately, there’s an easy hack for cleaning them without knocking that grime all over yourself and your furniture. Make sure your fan is off, then grab an old pillowcase, slip it all the way onto a blade, and press the fabric against the blade while you slide the case off. The case catches all the dust! Repeat with each blade, then empty your case into the trash and toss it in the washer.
Keep Spices Organized with a Magnetic Rack
If you store your spices in a cabinet, there's a good chance that it takes you more time than it should to find the right spice when you need it. Installing a magnetic spice rack in your kitchen saves space and organizes your spices. These racks can be installed in a variety of places - inside pantries, on refrigerators, on the side of cabinets, etc. Displaying your spices in a fun/organized way can add to the aesthetic of your kitchen as well.
Remove Small Scratches on Furniture with Toothpaste
Furniture gets scratched - that’s life. Instead of having your furniture refinished for hundreds of dollars, just grab a pea-sized amount of any non-gel toothpaste. Rub it onto the scratch until it disappears. Wipe the area with a damp towel and your unsightly scratches should be less visible.
With these creative tips in hand, you can keep your home tidy and save yourself some time and effort in the process. Less time cleaning means more time to relax and enjoy your tidy home!