If you are a college student (or perhaps a recent college grad) and you are dreaming of the day you can own your own home, but worried about how your student loans might affect you, here’s some great information…
46% of all Millennial homebuyers in 2017 purchased their home while still paying off their student loans.
Statistics about the average college graduate & their student loans:
- The age of the average college graduate is 22 years old.
- The average student graduates college with $25,000 in student loan debt.
- The terms of the average loan are 10 years, with a monthly loan payment of $280, and an interest rate of 6.8%.
This means the average college graduate has what amounts to a 10-year car payment after graduation.
Is Earning a Degree worth the Debt?
According to a study by the Brookings Institute, the dividing line between haves and have-nots in homeownership is “education, not student debt.”
“Men with a BA earn $35,000 more a year than those without, while for women the gap is $25,000.”
A study by Fannie Mae supports this fact as they go on to say:
“Those who completed at least a bachelor’s degree without student debt were 43% more likely to be homeowners than high school graduates who didn’t attend college and don’t have student debt.”
The College Board reports that:
“the typical bachelor’s degree recipient can expect to earn about 66% more during a 40-year working life than the typical high school graduate earns over the same period.”
Reasons Those with Student Loans Are Delaying Buying a Home:
- 85% – Can’t save for a down payment because of student debt
- 74% – Don’t feel financially secure enough because of existing student debt
- 52% – Can’t qualify for a mortgage due to debt-to-income ratio (DTI)
- 47% – Can’t afford their preferred house or neighborhood
- 18% – Don’t have the financial know-how to confidently navigate the housing market
Seems like there is some work to be done to educate those with Student Loan debt that they may be able to buy now:
According to Ellie Mae’s Origination Report, loans closed over the last year had an average front-end DTI of 25% and an average back-end DTI of 39% which is much higher than many believe they need.
Not having the financial know-how to navigate the housing market? That’s where I come in! I will be your strategic partner. You, your lender, and myself make up a team- with a common goal- to make your dream of owning a home come true!
“With student debt on the rise, there’s been a lot of speculation about whether the cost of a college degree hurts an individual’s ability to buy a home,” says NerdWallet’s Chris Ling. “From what we’ve seen, getting a four-year degree or higher is actually positively associated with homeownership — even when accounting for debt.”
If you are tired of renting, but afraid you can’t qualify to buy a home because of your student loans, let’s chat! Homeownership may be more of a reality, than a dream.
I always say, “If you don’t ask the question, the answer will always be “no” (or whatever you don’t want the answer to be).” If you want to know if you can qualify to buy a home, you have to ask the question!