I have recently been doing some of my own research on buying a home or buying land with student loan debt. What I have been finding is news that it is possible to purchase property even if you have student loan debt. As most of my readers know, student loan debt levels are at an all time high. That does not, however, mean that you should forgo the dream of purchasing your own property.
When purchasing land, keep in mind that many sellers finance the land themselves. If you pay 25-30% of the price of land, you will often get financing. Why is this? First, there is little risk to the lender. If you do not pay, the lender can repossess the land. The lender has 25-30% in security for the land. Further, you will have made some payments on the land/property.
I must say that I did not know a great deal about purchasing property before researching for myself. Most of what I was told was basically that a student loan debtor would not be able to get land. However, when I began to question this and see what people were saying, I found that purchasing land and property is not that hard. Unlike getting a loan for an automobile or for consumer goods, land and houses often appreciate. Again, as I mentioned, they can be recouped. The bigger the down payment that you save up means that you will have a much better chance of getting something.
Many people mistakenly believe that student loan debt will hold them back from becoming homeowners. This is because many are used to being turned down for credit cards. As I already mentioned, purchasing property is not the same as getting a credit card. A bank has a very small likelihood on collecting on a credit card if you owe. But a lender knows that it can get property back if needed. Real property such as land can not be hidden as easy as cash. Further, you are not going to be able to get rid of it without having full ownership, which comes after you pay it off.
If you are thinking about purchasing a house or land, make sure that your credit is fairly clean. Get rid of your credit card balances. I recommend carrying no balance on your credit card and paying it off monthly. Have at least one credit card on hand, but don't rely on it. If you get rid of a credit card, make sure that you keep your oldest account, as the longer you have accounts open and in good standing, the better it reflects on your credit.
Also, check the website http://www.creditkarma.com to see your credit score. It is a free website and is one that I use all the time to see how my score looks. Currently I am moving closer to a score in the high 700's, even with hundreds of thousands in student loan debt. Yes, you can have good, even great credit, with extremely high student loan debt.
Do not let anyone tell you that you can not achieve your dreams. I like to check http://www.landwatch.com to see what I can purchase with specific amounts of money. For example, $50,000 buys you some acreage in the Pacific Northwest, an area that I know firsthand to be a desirable area of the country to live. Landwatch is a good website because it lets you search by county in every state of the United States and lets you put in amounts that you are considering budgeting for land. They also have international land listed. While it may not be the best way to purchase land, it's a great way to get an idea of costs.
Also, remember that land prices are usually listed higher than they actually sell for. Sometimes as much as 15-20% higher. The bigger the down payment you have for the purchase of land, the easier you will find a lender.
The pictures to the left are actual pictures of a 5 acre parcel of land with a creek running through it in the Pacific Northwest, close to Seattle, for $50,000.
For example if you have SL debt of $50,000 and your payments are $400 a month for the life of the installment, and your gross monthly salary is $4,000... your DTI is 10% -- which is a fairly healthy level. That said, you would not be able to carry the payments on a $350,000 mortgage unless you put a whopping amount down on it in cash, but you should not have that much trouble getting a $175,000 mortgage. If your mortgage payments come out to $1,200 a month... then your total monthly debt payments come out to 40% of your take-home, leaving you 60% remaining for living expenses (utilities, food, clothing, transport, etc).Keep in mind that if you are a law graduate, you will have the opportunity to partake in IBR, which makes your loan payments 15% of your income. If you live below your means and save up for a down payment on a house or land, you will be able to find lenders who will lend to you.
When purchasing land, keep in mind that many sellers finance the land themselves. If you pay 25-30% of the price of land, you will often get financing. Why is this? First, there is little risk to the lender. If you do not pay, the lender can repossess the land. The lender has 25-30% in security for the land. Further, you will have made some payments on the land/property.
I must say that I did not know a great deal about purchasing property before researching for myself. Most of what I was told was basically that a student loan debtor would not be able to get land. However, when I began to question this and see what people were saying, I found that purchasing land and property is not that hard. Unlike getting a loan for an automobile or for consumer goods, land and houses often appreciate. Again, as I mentioned, they can be recouped. The bigger the down payment that you save up means that you will have a much better chance of getting something.
Many people mistakenly believe that student loan debt will hold them back from becoming homeowners. This is because many are used to being turned down for credit cards. As I already mentioned, purchasing property is not the same as getting a credit card. A bank has a very small likelihood on collecting on a credit card if you owe. But a lender knows that it can get property back if needed. Real property such as land can not be hidden as easy as cash. Further, you are not going to be able to get rid of it without having full ownership, which comes after you pay it off.
If you are thinking about purchasing a house or land, make sure that your credit is fairly clean. Get rid of your credit card balances. I recommend carrying no balance on your credit card and paying it off monthly. Have at least one credit card on hand, but don't rely on it. If you get rid of a credit card, make sure that you keep your oldest account, as the longer you have accounts open and in good standing, the better it reflects on your credit.
Also, check the website http://www.creditkarma.com to see your credit score. It is a free website and is one that I use all the time to see how my score looks. Currently I am moving closer to a score in the high 700's, even with hundreds of thousands in student loan debt. Yes, you can have good, even great credit, with extremely high student loan debt.
Do not let anyone tell you that you can not achieve your dreams. I like to check http://www.landwatch.com to see what I can purchase with specific amounts of money. For example, $50,000 buys you some acreage in the Pacific Northwest, an area that I know firsthand to be a desirable area of the country to live. Landwatch is a good website because it lets you search by county in every state of the United States and lets you put in amounts that you are considering budgeting for land. They also have international land listed. While it may not be the best way to purchase land, it's a great way to get an idea of costs.Also, remember that land prices are usually listed higher than they actually sell for. Sometimes as much as 15-20% higher. The bigger the down payment you have for the purchase of land, the easier you will find a lender.
The pictures to the left are actual pictures of a 5 acre parcel of land with a creek running through it in the Pacific Northwest, close to Seattle, for $50,000.
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