Emeryville, Calif., March 7, 2018 (Newswire.com) - Buying a home can be a challenging process for those who are in debt. Student debt specifically can be especially prohibitive. In fact, about 83 percent of those who do not own a house cite their student loans as the reason. They may be unable to save money for a down payment or they may fear they won’t be eligible for a mortgage. However, federal income-driven repayment plans (IDRs) may help borrowers who wish to buy a house despite their student loan debt. American Financial Benefits Center (AFBC), a document preparation company, supports its client’s financial goals, including homeownership, by helping them apply for and stay enrolled in IDRs.
“Buying a home is a big deal and a big decision that should not be held back by student loans,” said Sara Molina, Manager at AFBC. “Though not everyone wants to own a home, those who do but need some help may want to look into IDRs to help them through the whole process.”
Buying a home is a big deal and a big decision that should not be held back by student loans.
Sara Molina, Manager at AFBC
Many things are needed to buy a house, including a down payment and closing costs, a debt-to-income ratio (DTI) at or below 43 percent, and a favorable credit score. Student loans may get in the way of all those things. High student loan payments can make it difficult to save up for that down payment and all additional costs, push up that DTI, and negatively affect a credit score if payments are missed. Combined with other debt situations, all that can either result in a mortgage with unfavorable interest rates or no mortgage at all.
Student loan borrowers wishing to buy a house should know a few things to improve their chances. First, the debt-to-income ratio does not factor in total debt amounts, just monthly minimum payments. Therefore, lowering their payments through an IDR, if eligible, can positively impact that DTI. To maximize that impact, borrowers may also choose to reduce their other debts using funds freed up from lowering that student loan payment.
That IDR can help borrowers through the home buying process in other ways as well. Those lower payments can enable borrowers to save more money for a down payment and closing costs. They can also enable struggling borrowers to more easily stay current on their loans, which may positively affect their credit score.
“Student loans can complicate life in many ways, but we’re firm believers that they shouldn’t get in the way of life,” said Molina. “Enrollment in IDRs can make student loan management easier and may provide certain borrowers a little more extra money toward the purchase of a home. AFBC clients can attest to the benefits of being in an IDR, and we hope they feel they have the ability to meet their financial goals, such as homeownership.”
About American Financial Benefits Center
American Financial Benefits Center is a document preparation company that helps clients apply for federal student loan repayment plans that fit their personal financial and student loan situation. Through its strict customer service guidelines the company strives for the highest levels of honesty and integrity.
AFBC is a member of the Association for Student Loan Relief (AFSLR), and each representative on the phone has received the Certified Student Loan Professional certification through the International Association of Professional Debt Arbitrators (IAPDA).
To learn more about American Financial Benefits Center, please contact:
American Financial Benefits Center
1900 Powell Street #600
Emeryville, CA 94608
Source: American Financial Benefits Center