University is over for students across the globe. Some will be resting over the summer break before hitting the books again in the fall while others have graduated and get to move on to new and exciting pursuits. Either way, students everywhere are desperate for a job.
Tuition is very expensive, averaging approximately $10,000 per year for classes alone. This number does not include living expenses, textbooks or transportation. This is why during the summer months, students work hard to save enough money to pay for their upcoming school year.
Despite this, even if a person works 40+ hours a week in the four months leading up to the new school year, many still do not have enough to cover tuition. This is why students turn to student loans. The average student will be at least $50,000 in debt when all is said and done. Loans are a great way to be able to pay for your education and are often unavoidable, but they do come with serious implications.
One major thing that student debt affects is getting a mortgage. So many things are taken into consideration by banks when you apply for a mortgage, one being what other monthly payments you are making on debt acquired. AKA, your student loans.
One factor a bank will take into consideration is your employment history. While balancing full time studies and a job can be difficult, it is important to show that you can work hard and be reliable. Banks would give a loan to someone who worked at Starbucks for four years and only has a Bachelor of Arts over someone who just finished Graduate studies but has not worked in the last six years. Typically, they want to see you have held a job for a minimum of two years (note: some banks will find it acceptable if you at least stay within one field for two years).
Another factor banks will look at is your monthly income. Specifically, how much you are able to save each month after putting money towards rent, food, utilities, transportation, etc.. This is incredibly valuable information because banks need to see that you will be able to make mortgage payments while also making your student loan payments. If you will not be able to pay both in full every month, you will not get a mortgage.
The reality is that while student loans are necessary for many students who are not receiving financial aid from scholarships or family, they make it difficult to get a mortgage. It can be done, but you have to prove that you can handle it. Remember that sometimes waiting is not a bad thing. Take a couple extra years to pay down your loans, then jump into a mortgage.
School and a house are two major expenses, so do not pursue them lightly.
Best of luck!
Your Real Estate Professional,