By Deb Tebbs Group

As long time Realtors® one of the most common questions that we’ve been asked over the years is can I still buy Bend Oregon Home even if I have student loan debt? And the answer to this question is it depends but, there still is hope out there thanks to the looser lending standards over the last 10 years which have made it easier for people to buy homes than ever before.

Buying a Bend Oregon Home with Student Loan Debt

So you’re planning on buying a Bend Oregon Home and you have some student loan debt, although in the past this may have been bad news for some homebuyers, the reality is that there are some lenders out there who will approve you for a mortgage loan if you meet the following criteria:

Good FICO Score – Should be at least 700 or better

Lower Debt-To-Income Ratio (DTI) – Must be at least 33% of income.

Solid Payment History – All of your bills must be paid on time each month.

The Role Of Your Student Loans

Excellent Employment Record – You must be working at one job for at least one year and not be planning on changing jobs soon. Let’s say you’re a recent college graduate earning $45,473 annually –  the average for the college class of 2014. Your gross monthly income would be about $3,789. You have a car loan monthly payment of $200 and a credit card payment of another $200. On top of that, let’s say you have $30,000 in student loans, about the average amount of debt for graduating college seniors. Assuming this is an unsubsidized Stafford loan at 4.6 percent interest, you’ll be left with a monthly payment of $312.

Now, let’s say you’re applying for a home loan of $222,261 with a $1,061 monthly payment – the national average. Your total monthly debt payments would total $1,773 and your debt-to-income ratio would be around 46 percent, putting you over the 43 percent threshold and potentially out of luck for buying that particular house.

Source – USNews

Lenders Can Get Creative with Debt

There’s no denying that in today’s world many lenders are literally willing to go the extra mile to obtain more business and prequalified buyers for mortgage loans including getting creative with the buyers debt.

Some of the strategies that lenders can use to get creative with the buyers debt include the following:

• Student Loan Debt – Your lender may advise you to defer your student loan repayments for up to 12 months because it’s possible that they won’t view a deferred student loan debt as part of your Debt-To-Income Ratio.
• Auto Loan – If you currently have 10 payments or less on your auto loan your lender may not include that auto loan as part of your DTI.

Things to Do Financially Before Buying a Home

Buying a Bend Oregon Home can require a lot of “leg work” financially if you’ve never gotten your finances in shape before.

Before going out to get pre-qualified for a mortgage loan make sure you use this checklist to confirm that you’re ready to meet with a lender.

Paperwork – Gather your financial paperwork including two years-worth of W2’s, Federal income tax returns, paycheck stubs and your bank statements.

Financial Gifts – Be ready to show complete documentation for financial gifts from friends or relatives if you’re planning on using those gifts as part of your down payment on a home.

Smart Debt Management – Pay down all balances on credit cards and other loans to under 30% of the loan and don’t close credit accounts after you’ve paid them off because it only helps you to keep those accounts open.

Fix or Improve your Credit Score (FICO Score)

One way to do this, on top of paying your bills on time, is to keep your credit card balances at or below the 30% threshold of the max available credit.  This can potentially save a buyer thousands of dollars over the life of the loan. Higher credit scores would typically give you better interest rates.

Avoid quick fixes. Do not close existing credit accounts if you do not use them.  Also, do not pay all of your card balances to zero at once, unless you can do this every month; any change can be viewed as a quick fix.  (In general, you do not want to change the way you utilize your credit.) Quick fixes can negatively impair your credit.  In the months leading up to a home purchase, keep paying your bills as you usually do; do not close any old credit lines and try to avoid opening up any new ones.

Maintain Healthy Debt – If you don’t have a substantial credit history, lenders might not have enough data to approve you for a loan. Maintaining healthy debt and being a responsible borrower can help you avoid being labeled as a “thin file”.

To obtain your credit score, you can request a FREE Annual Credit Report here. Make sure your credit report is accurate and up-to-date. If you have suspicious or dated transactions listed on your credit report, one option is to hire a credit repair agency to send legal verification letters on your behalf.

Source – Studentloanhero.com

Buy a Bend Oregon Home

To learn more information about what you need to do to buy a Bend Oregon Home contact the Deb Tebbs Group today by calling us at (541) 323-4823 or connect with us online.

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