How to Prevent Student Loan Debt Putting Aside Your Dream House
For many, to succeed in life means to buy a house, start a family, see the world and fulfill many other dreams that are unique to each person. However, many people postpone these dreams because of the significant debt on student loans.
The truth is that you can do all these things and even more, even if you have a student loan debt. You just need to have a strategic choice and have a specific financial plan.
If you want to buy a house
Tip # 1: Start with an advance payment
If you want to buy a house, one of the most important things is to save on a down payment. There are many options when it comes to buying a home, some of which involve less than 20 percent down payment. However, if you save 20 percent, you will usually be in the best financial position. This allows you to own ⅕ of your home right away, avoid private mortgage insurance (PMI), and find better mortgage rates.
I know that it’s difficult to save tens of thousands of dollars for a down payment, especially if you want to pay student loans. However, maintaining a down payment is the best way to buy a home and minimize financial risk.
Tip number 2: buy a start house
Of course, having a four-bedroom house on the lake would be amazing, but it’s very important to take small steps when looking for a home ownership. Buying a home is a serious decision – one of the biggest financial decisions you are likely to make in your life.
Because of this, it is important to buy a house that you can really afford. For most young people who have student loan debts, this usually means buying a “start house”. The starting house is usually smaller, needs some updating and is cheaper than your dream home.
The purpose of the starting house is to get used to owning real estate and the pros and cons associated with it.
And remember, the fact that your mortgage payment will be lower than your rent does not mean that household ownership will be generally more affordable – maintenance and taxes will accumulate. Buying a house while you are in arrears on a student loan is good, but you should have a comfortable financial buffer and a clear plan for how you will respond to financial situations that arise.
Tip # 3: Get a roommate
Living with a roommate is a great way to save on expenses when you have a home. Whether you are single or married, your roommate definitely has its pros and cons. From a financial point of view, however, this is a great professional.
A roommate can help you pay most of your mortgage and utility bills every month. Or you can set aside your roommate’s rent for an additional student loan monthly. In any case, having a roommate can definitely help you manage your mortgage and student loan payments at the same time.
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