Hello, everyone and welcome back to a new video. Now, let's take a second to talk about student loans. I know we all hate student loans and for some people they just seem like they are never going to go away. It's like that dark cloud, always above your head, okay, think about if you actually didn't have student loans, like let's say you owe $ 40,000 in student loans.

If you didn't have that loan, you can buy yourself a Tesla or better, yet you could have a down payment for a home, but today, I'm gon na show you how you can actually buy a home with a massive amount of student debt. Now, if you don't know, I am a mortgage lender in Arizona. So I see this firsthand people come to me to get the conversation started on if they're gon na be able to buy a home or not so you know all run people through, essentially the key components of what you need to actually qualify for a homes. Things like you know, work history, downpayment, if any at all and more importantly, credit, but not necessarily just credit scores like everyone thinks, but also your monthly liabilities.

And ultimately it comes down to something called your DTI or your debt to income ratio, and this is hands-down. The biggest problem or roadblock that I see on a daily basis is debt to income. Everyone thinks hey Sean. I want to qualify for a home, that's way up here and I'm like okay.

Well, you only qualify for a home down here because of your monthly liabilities and, of course, there's ways to move some numbers around, get them to align properly. So you can actually afford the home you want to afford, but I don't want to get too much into it in this video. Essentially, your monthly liabilities are the things that you are paying every single month. So things like car payments, we've got your credit card bills and, more importantly, your student loans and each specific loan program has a specific DTI or debt to income ratio that you are allowed to qualify for that home.

So let's say you make $ 10,000 a month. Okay, that's your salary, making 10 grand a month, not too shabby, and let's say you pay $ 3,000 in liabilities. Every month you got a car payment, some student loans, some credit cards so essentially you're paying $ 3,000 you're getting 10,000. Every month.

You have a 30 percent debt to income ratio which isn't terrible, but what I'm trying to get at is the fact that DTI is impacted heavily when you've got a crippling student loan payment. If you have a student loan payment of $ 500 every single month, that is going to absolutely crush your DTI, but wait Shawn. I've heard that I can just defer my student loans and for those you who don't know what a deferment is, it's essentially a delay. You can actually delay on paying your student loans without actually being penalized for it where people might say hey.

You should just seek forbearance instead, which is very similar to deferring on your student loans, but a forbearance is usually when you just lower your monthly payments. A little bit when you're, going through some tough financial situations, but I'll be the first person to tell you NO know deferring your loans will not drastically make an impact on your financial situation when you are trying to qualify for a home. Why? Because US lenders have to hit you for 1 %, so essentially that means I have to hit you for an imaginary 1 % payment on that student loan to add to your debt to income ratio. So let's say you owe $ 60,000 on your student loans.

I have to hit you for a $ 600 a month payment on that sucker, which is absolutely going to kill your debts income unless you're, balling and you're, making some really good money that $ 600 is going to hurt big-time. However, I will say that it is smart to defer your student loans for say six months, if you don't have any type of savings built up in your accounts, because if you defer your payments for six months, you could basically save three to five thousand dollars that You otherwise would have put into your student loans. This can be big when you're trying to buy a home, because once you've saved a little bit of money in the bank, you can go back to actually paying on your student loans. And since you have that three to five thousand dollars, you might be able to go the conventional loan route, and one of the many pros of going with a conventional loan is the fact that I probably don't have to hit you for that 1 % monthly payment On your student loans, if you're paying three hundred and fifty dollars a month on your sixty thousand dollar loan, you're gon na be in a much better financial situation in terms of your DTI versus that six hundred dollars a month, that's gon na absolutely crush you plus You'll be putting more money down because you're able to save that three to five thousand dollars when you deferred your loans.

So now your loan amount on the home is actually lower, essentially, saving you more money on your monthly payment. It's a win-win! Now, just a disclaimer, though the FHA dudes, on the other hand, they're gon na hit you for 1 %, no matter what so you're pretty much screwed. If you have to go that route, but let's recap: do I recommend you defer your loans? No, a! No! No! No nah, no, definitely not. I only recommend you for your loans.

If you have a plan of attack, if you think you can defer your loans to hide your debt to qualify for a loan, you're wrong, you're, really just delaying the process and you're honestly making it harder for you to actually buy a home. There's no point in wasting your time. I mean time. Is money come on okay, so I recommend you.

First come up with a plan talk to a lender figure out how much money is gon na be needed for down payment? What's my credit score gon na need to be then talk to whoever has your student loans? Can I even lower my payment? If I wanted to, can I defer them if I want to, and you need to know that federal loans and private loans are handled way differently, so, first you need to figure out which one you actually have, but ultimately, once you've done, your research once you've got Your plan totally figured out, that is when I recommend you defer your payments only if you need to defer your payments to reach your goal, which, honestly, most of the time deferring your payments, isn't working towards your goal. Again, it's only really working towards your goal. If you need to save up some money for a down payment, once you have a little bit of money saved up, it's usually so much better to actually actively be making payments on your student loans than to take that 1 %, and all this was probably super Confusing I tried to break it down as best as I possibly could. I could have gone into so much more depth about specific loan programs and specific different types of student loans that you could be in, but ultimately you don't need to know any of that crap.

You only need to know what it takes for you to get into the home. You want to get in the people who work in the business need to know that stuff again, not you so talk to someone in the business. They will give you a specific roadmap. As to what you need to do, and I'll be the first and probably only lender in the entire world, to tell you that maybe buying a home isn't in the right cards for you, if you have a ton of student debt, maybe it's in your best interest To actually aggressively pay down that student debt before you buy a home, I know it's unheard of for a lender or a real estate agent to tell you to not buy a home.

But there's no point in putting yourself in a worse situation than you already are believe me, I'm big into finance. I see this stuff every single day when I'm pulling credit reports and I'm seeing people's liabilities. Okay, sometimes it's just not in your best interest to wrack on new debt. Okay, if you have a lot of debt, here's what I recommend rank your debt from biggest to smallest start from the bottom, at all, the smallest debt that you have and aggressively pay each one off all the way up to the top okay, that is gon na Put you in the best financial situation when you have less debt, but ultimately that's my take on buying a home with student debt.

Let me know what you think in the comments down below. Do you agree with me? Do you not agree with me? Is your situation similar to this? Let me know down there and again, if you're in Arizona, you've got any questions at all relating to mortgage, maybe the first-time home buyer, any type of that stuff head on over to lending Shawn, mauka calm. And hopefully you enjoyed the video and actually learn something new. That is the goal of this.

I know student debt can be very tough, sometimes at that infamous cloud above your head. So hopefully this didn't make you feel a little bit more comfortable and the best tip. I can give to anyone with student loan. Debt is the fact that you need to know exactly when those suckers kick in, and you know exactly when you need to make your payment's and just make them on time.

Take care of them and there won't be any issue to you. Okay, I honestly see the biggest struggles, the biggest issues from those who aren't sure when their student loans actually kick in, they start racking up a few late payments. Credit scores drop, start end up owing more on their student loans, and it's just this downhill spiral so take care of that from the get-go and you'll be totally fine. But that's it thanks for watching and hit that like button and subscribe.

If you're new around here and I'll, see you in the next video.