April 20, 2023 young couple in new house

As the cost of higher education continues to rise, more and more Americans are taking out student loans to finance their education. While student loans can be a valuable investment in one’s future, they can also be a source of anxiety when it comes to other financial goals, such as buying a home. If you’re considering purchasing a home in Jacksonville, FL, you may be wondering if your student loans will affect your ability to get a mortgage. In this article, we’ll take a closer look at how student loans can impact your mortgage application and what you can do to improve your chances of approval. Our Jacksonville mortgage company is dedicated to helping potential homebuyers navigate the complex world of mortgages, and we’re here to help you make informed decisions about your financial future.

What are Student Loans?

Student loans are financial aid that college students can receive to pay for their education. These loans are specifically designed for students to help them cover the costs associated with attending college, university, or vocational school. As we all know, college is far from a cheap proposition.

Student loans can come from a variety of sources, including the federal government, state governments, and private lenders. Federal student loans are the most common type of student loans and are provided by the U.S. Department of Education. They usually have lower interest rates and more flexible repayment terms compared to private loans.

When a student takes out a loan, they must pay back the amount they borrowed plus interest. Depending on the loan, repayment may begin while the student is still in school or after they have graduated.

It’s important to note that taking on student loans is a significant financial responsibility and should be carefully considered before accepting. However, for many people, student loans are a necessary tool to help them achieve their educational goals.

How many Americans have Student Loan Debt?

As of 2023, approximately 43.8 million Americans have student loan debt, with a total outstanding balance of over $1.635 trillion. This number includes both federal and private student loans. The average student loan debt for a college graduate in the class of 2023 was $37,338, according to a report by the Education Data Initiative.

Over the past few decades, the amount of debt that students take on in student loans has been increasing. According to data from the College Board, the average annual cost of tuition and fees at a four-year public college in the US has increased by around 3% to 4% per year over the past decade. At the same time, federal student loan limits have remained relatively stagnant, resulting in many students needing to take out more loans to cover the cost of attendance. In addition, rising living expenses and the increasing popularity of more expensive graduate and professional programs have also contributed to the growing student loan debt burden. However, it is worth noting that recent changes in policy, such as the pause on federal student loan payments during the COVID-19 pandemic and new policies aimed at reducing the cost of college, may help to mitigate the growth in student loan debt in the future.

Can I get a mortgage if I have student loan debt?

Yes, it is possible to get a mortgage loan if you have student loan debt. However, the amount of student loan debt you have and how you have managed your student loan payments may affect your ability to qualify for a mortgage and the terms of the mortgage.

When you apply for a mortgage, the lender will look at your debt-to-income ratio (DTI) to determine whether you can afford to make your mortgage payments. Your DTI is the percentage of your monthly gross income that goes towards debt payments, including your student loan payments. If your DTI is too high, you may not qualify for a mortgage or may only qualify for a mortgage with less favorable terms.

In addition, if you have defaulted on your student loans or have a history of late payments, this could negatively impact your credit score and make it more difficult to get approved for a mortgage. On the other hand, if you have been making your student loan payments on time and have a good credit score, this could improve your chances of getting approved for a mortgage and may result in more favorable terms.

Overall, having student loan debt does not necessarily prevent you from getting a mortgage, but it is important to consider the impact of your student loan debt on your overall financial situation and to make sure you are taking steps to manage your debt responsibly.

Improving my Chances at a good Mortgage Loan while having Student Debt

If you have student loan debt and want to improve your chances of getting a good mortgage loan, here are some steps you can take:

Improve your credit score: A higher credit score can improve your chances of getting approved for a mortgage and may result in better loan terms. Paying your bills on time, keeping your credit utilization low, and disputing any errors on your credit report can help improve your credit score.

Reduce your debt-to-income ratio: As mentioned earlier, lenders will look at your debt-to-income ratio to determine whether you can afford to make your mortgage payments. Paying off other debts, such as credit card debt, can help lower your debt-to-income ratio and improve your chances of getting approved for a mortgage.

Consider a longer repayment term: If you have federal student loans, you may be able to choose a longer repayment term, which can lower your monthly payments and reduce your debt-to-income ratio. However, keep in mind that a longer repayment term will also result in paying more interest over time.

Explore loan forgiveness programs: If you work in certain fields, such as public service or education, you may be eligible for loan forgiveness programs that can reduce your student loan debt. This can improve your overall debt-to-income ratio and make it easier to qualify for a mortgage.

Shop around for lenders: Different Jacksonville mortgage lenders may have different requirements and qualifications for their mortgage loans. Shopping around and comparing multiple lenders can help you find a lender that is more likely to approve you for a mortgage despite your student loan debt.

Overall, improving your credit score, reducing your debt-to-income ratio, considering a longer repayment term, exploring loan forgiveness programs, and shopping around for lenders are all steps you can take to improve your chances of getting a good mortgage loan while having student debt.

Mortgage Lenders in Jacksonville, FL

If you or a loved one are in need of a mortgage loan in Duval County, don’t delay in calling one of our knowledgeable mortgage lenders in Jacksonville. For over a decade, Bayway Mortgage Group has been here to help consumers like you secure mortgages for your dream homes. The time to call Bayway Mortgage Group is now! Contact us today for your FREE mortgage consultation.