A growing number of people have student debt that can take many years to clear away. While you are continuing to pay off your student debt, life is still going on, and you may end up wanting to buying a Boston condo for sale during this time. However, it can be tricky to get a mortgage if you also have student debt. Student debt may affect a financial institution’s willingness to lend to you in the following ways.
To understand why student loans affect the ability to get a mortgage, you need to understand a little about the process of getting a mortgage. When you apply for a mortgage, the bank will check your credit report to see if you have any other preexisting payment obligations. Any outstanding payment obligations will lower the amount the bank is willing to loan to you. Your monthly payments for loans will show up as an obligation on any credit report.
Multiple Loans or Private Lenders
Any sort of debt on your credit report makes you look like a riskier investment for the bank, and the way private lenders operate can make your chances even worse. The shorter-term amortizations and higher interest rates associated with a student loan from a private lender could end up making your payment obligation appear inflated. There are similar issues if you have multiple student loans instead of one single, large loan. If you plan on getting a home anytime soon, it is best to avoid private lenders and consolidate multiple student loans into a single loan.
If you have a student loan, you should try to pay it off without any delinquencies. Skipping payments on a student loan can make it difficult to get a mortgage because it lowers your credit score. People who have a history of not being able to make loan payments for student loans will seem riskier to the bank. Lenders may be cautious about providing you with a mortgage if you seem unlikely to pay it back properly.
If your student loans are either deferred or paid off, they should not technically affect your ability to get a mortgage. However, there may be bureaucratic inaccuracies that end up causing problems for you while hunting for a mortgage. In the case of deferments, lenders will automatically view the loan payments as being 2 percent of the principal balance unless you can get a payment letter from the lender that more accurately states what your payments will be. If you have paid off your loans, your report may still show the payment obligation until you can provide documents proving your debts are paid off.
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Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs
In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.
For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.
Charles River Park
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John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.
Ford Realty Inc
137 Charles Street
Boston, Ma 02114
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