College Students: The Balance Of Student Loans and a First Home

College students are so wrapped up in student loans that the idea of owning their first home is a far off impossibility. Outstanding student loan debt has reached totals exceeding $1 trillion. That number is higher than the amount owed on all credit cards within the U.S.

“Some student loan payments are as high as a mortgage,” said Cari Sweet-Kostoplis, an assistant vice president of the Jersey Mortgage Corporation in Parsippany. Because of the sky-rocketing cost of college, many seeking to become a first-time home buyer are denied because of the high debt level. “Most lenders follow underwriting guidelines that limit total debt payments — for the mortgage and property taxes, plus credit cards, student loans, car loans and other debts — to 45 to 50 percent of a borrower’s adjusted gross income.”

Is there hope?

Yes. Students can restructure or consolidate loans to extend the length of the loans to overall decrease the monthly rate. Another option is to aggressive attack the loan so that when a student goes to begin their home search, they are able to take on more debt. The third option is to use the benefit of family. Parents and grandparents can take out a home equity loan and use the proceeds to pay off the student loan balances. Programs such as Kiddie Condos are viable as well.

Discuss with your lender, but don’t put the dream out of your grasp! 
Source: http://www.nytimes.com/2012/04/29/realestate/mortgages-dealing-with-student-debt.html?_r=1&ref=realestate