Will student loan repayment get in the way if you want to buy a house? Not in case you are on schedule as part of your payments. Because they don’t yet understand how credit and lending works, a lot of graduates often get themselves into trouble by blowing off student loan payments. They don’t find any young people who are responsible for building their own credit score. You need to start with student loans and credit cards. Most people who are quite young would think making credit card payments on time is a lot more significant to a credit history than doing the exact same with a student loan. Debts are nevertheless debts that have to be paid when getting your credit score.

Source for this article: Student loan repayment affects your ability to get a mortgage By Personal Money Store

Credit scores and student loan repayment

Lenders divide debt by short term loans and revolving loans. Installment loans for bad credit are those that require a fixed amount each month such as a car loan. Your student loans do have an effect on your credit score, but it doesn’t have to always be negative. When credit bureaus calculate credit scores, student loan debt is viewed more favorably than credit card debt. Maxing credit cards are going to help you more than owing money on short term loans.

Debt-to-income ratio

Whenever you discover the house you would like to buy and it seems like it is finally time to apply for a mortgage loan, lenders don’t just check out how much money you owe and whether you make payments on time. Your income is important in this equation. This is called the debt to income ratio. A couple’s or individual’s debt, including the new house payment they’re promising to make on time, each single month, should not be more than 35 percent of their total income.

Preparing to get a mortgage loan

Eliminate as much debt as possible before you make an effort to qualify for a mortgage loan. It is nearly impossible to quickly settle your student loans. Not paying your student loans could adversely affect your life and credit score for many years just as much as much as defaulting on a mortgage. Students have been given numerous different options to aid them when they need help within the repayment process.

Student loan repayment choices

In the interest of preventing a growing trend of student loan default, many student loan repayment choices are accessible. Usually, a monthly basis is what a standard student loan repayment program is on. An extended repayment program can stretch to 25 years, but you should probably keep in mind that this approach increases the total amount of the interest over the life of the loan. Graduated student loan repayment programs begin with interest-only payments for all of those borrowers who anticipate making increasing financial progress, which most graduates do. Along with the interest over the life of the loan, payments will continue to increase as well.

When the mortgage could have to wait

If you find yourself in real trouble when it comes to making your student loan payments, there are ways to solve the problem. When it comes to applying for a mortgage, they won’t help. Many recent graduates who are having a hard time finding a job within the current economic climate really like to use the income-sensitive repayment program. This program is for borrowers who don’t earn enough to cover their loan payment. An arrangement is typically made for a payment between 4 percent and 25 percent for the first five years and again the interest increases over the life of the loan. As a last resort, you may want to consider a consolidation repayment option. It allows student loan borrowers to combine multiple loans into one, extend the repayment term and sometimes will even lower the payment.

Additional data at these websites

Usnews.com

usnews.com/usnews/biztech/tools/modebtratio.htm

About.com

financialplan.about.com/od/creditdebtmanagement/qt/how-to-get-out-of-debt.htm

Student loan borrower assistance

studentloanborrowerassistance.org/repayment/repayment-plans/