Qualifying for a home loan with extensive student loans can be difficult, but not entirely impossible. If you are dedicated, you can focus on paying down your student loans or save up for a down payment. If you are extremely dedicated, you may be able to focus on both of these tasks at once.
Here are a few tips to help you work on both paying down your student loan debt and reaching a major savings goal.
- Create a detailed list of all of your debt. From each student loan you took out (privately or federally funded), all credit card debt, vehicle loans, to any other debt you may have and list the current balance owed, the monthly minimum payment required, the amount you actually make on average, and the interest rate for each.
- Prioritize your debt. Using the above information, list your debt in order from the highest interest rate to the lowest. You will want to begin focusing any additional payments to this debt and minimum payments to everything else. For many, the high interest rates belongs to one or most of their student loans.
- Consider consolidating. If you have several student loans, it is in your best interest to consolidate the loans into a single loan to avoid paying on multiple interest rates. You may also qualify for a more affordable monthly payment as well. Here at the Student Loan Advisory Group, we help borrowers manage their student debt more efficiently—call to see how we can help you.
- Keep paying on your student loans. Whether they are in forbearance, deferment, or $0 income-based repayment you should continue to make any payment you can as your interest on these loans will only continue to accrue and subsequently raise your balance.
- Don’t forget about saving. Take a look at your general monthly budget to see how much you can set aside without missing a payment on anything. Then schedule a savings transfer to be taken out immediately after your paycheck is deposited. That way, if the money isn’t in your checking you are less likely to spend it. Even better, if you set it up as an automatic transfer, it will seem more like a monthly expense and you will be less tempted to transfer it back from your savings. Other ways to improve or increase your savings:
- Transfer all extra money into savings. Any money that is gifted, received as a bonus, rebates from shopping, or from selling an item should be deposited into your savings account. Since this money is not used to meet your expenses, it can be used to bolster your savings account.
- Review your budget and make cuts (and sacrifices). Eating out, daily caffeinated beverages, fun subscriptions (foodie boxes, makeup kits, books or magazines, etc.), and any other small splurges you make often should be eliminated from your spending habits and the money saved by not being used should go into savings. This is one of the hardest things to do and will require patience, practice, and strong will power.
- Get another job. Reaching a large savings goal may require going the extra (and even the extra-extra) mile to make more money so that your money can work for you. A second job, overtime, or a “side-hustle” (doing minor repairs for a fee, dog walking, car washes, or selling crafts you make for fun) can help bring in additional income that can go straight into your savings account.
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