Why Most Millennials Delay Their Dream Of Buying a House Due to Student Loan Debt
Everyone wants to buy their dream house. Buying or owning a home is often taken as a milestone of success in your life. For most Americans, it’s also a sign of building their wealth. However, it seems most workers today delay their dreams of buying a house due to financial constraints. The reason? It’s because they carry the burden of paying their student loan debt.
The Heart-wrenching Story
Ever since he was young, Ed McKinley dreamed of owning a $65,000 house in a nearby lake in New Hampshire. Since the late 1990s, McKinley worked hard to fulfill his dream. Fortunately, the owners let him move into his new home early.
They also said he can pay the rent until his buying process was completed. McKinley was so ecstatic when he heard the news that he immediately did some revisions like installing his modern stove, redoing the floors, and painting the walls.
However, the dreaded news suddenly came to him. The mortgage company decided to withdraw his application since they discovered that his income-to-debt ratio was a bit higher than their threshold. The company refers to his astounding $34,000 federal student loan debt. So until he could pay off his student debt, he wasn’t allowed to pay for his dream house.
A Major Burden
It turns out that McKinley isn’t alone in carrying this burden. According to the latest survey conducted by the National Association of Realtors (NAR), around 45 million people in the country carry the burden of paying their student debt.
Almost a fifth of that consensus owes the government more than $100,000 debt. This debt eats up a large portion of the workers’ income, threatening to push down their credit scores. It also impedes most Americans from saving, most particularly for landing a house.
The Realtors adds that around 83% of workers aging from 22-35 already have a student debt. They blame their educational loans for not availing or buying their dream houses yet. While 86% of millennials believe that purchasing a house or property is a good financial investment, only 15% of them have a mortgage today.
According to NAR’s managing director of survey research and communication Jessica Lautz, most student loan debt holders still want to have their own home someday, as its part of their American dream. However, it’s quite difficult to get there right now according to the participants’ answers.
Meanwhile, a senior research associate in Harvard University Jonathan Spader argued that while having a student loan debt is indeed a financial burden, he says that the higher education you acquire (thanks to the student loan), the more opportunities you’ll have in landing a great job with higher income. He believes it can help offset your financial debt.
Overcoming the Challenges
The financial experts recommend you apply the following tips to lower your credit score and increase your chances of purchasing a house, as well as paying off your student loan debts.
Always Pay on Time
You might think that paying a few days late is okay because it won’t affect your interest rate (or penalties that much), but studies suggest it can lower your credit score from 60-110 points, depending on the other items in your credit history.
Don’t Max Out Your Cards
Do not use your credit mindlessly. Always aim to use 30% or less of your available credit to keep your credit score low.
Pay Your Debts
As much as you can, pay off all your debts so that you can save more money in the process. The sooner you pay your debt, the sooner you can save money to buy a house.
Check Your Credit Reports Regularly
According to the Federal Trade Commission, around 20% of consumers have errors they’re unaware of that could affect their credit score. You can check your annual credit reports at AnnualCreditReport.com.
More in Loans & Mortgages
Pandemic Taking Its Toll On Your Career? Follow These Experts Tips to Land Your Dream Job While Being Stuck at Home
Are you currently in the market searching for a job? Well, then you’ve got your work cut out for yourself as...August 24, 2020
Stay Clear of These Major but Invisible Mistakes When Investing
People work to accumulate savings for the future. Making investments is also a part of this saving plan so that they...August 24, 2020
Have You Chosen Your Beneficiary Yet? Here’s Why It Should Be Your Top Priority
Do you remember choosing a beneficiary when signing up for a bank account or purchasing any asset? You must have wondered what it...August 24, 2020
Financial Mistakes Most Millennials Regret Making During College
Getting ready for college could be one of the highlights of your life, personally and professionally. A lot of opportunities open...August 17, 2020
Tips to manage Stress and Be Careful Once Offices Resume Post Lockdown
There would hardly be anyone who’d not be excited to get back to work after the Coronavirus lockdowns are lifted. It’s...August 17, 2020
Struggling to Figure Out Your Next Career Move? Here’s How You Can Keep Your Professional Progress On Track With These Expert Insights
We know that planning your next career move is the last thing on your mind right now. With companies closing and...August 16, 2020
Students Looking for Extra Income Can Apply for These Three Online Jobs
Students usually have limited budgets. And with unexpected expenses threatening to mess with those funds, most of them are now considering...August 15, 2020
The Five Most Important Things You Need To Consider When Getting a Personal Loan
A personal loan means borrowing from a lending entity, may it be a bank or some other credit provider. It’s...August 15, 2020
Struggling to set your Career straight? Take a look at These Tips that are Sure to Help
The pandemic has created havoc in many industries, and thousands of people are left without jobs. If not entirely out of...August 15, 2020