The impact of student loans
It’s no secret that crippling student loan debt keeps many Millennials from buying a home. But according to new data, Millennials with student loan debt aren’t just less likely to own a home. When they do buy? They face more expensive mortgage loans and lower home values, too.Verify your new rate (Oct 25th, 2020)
Buying a home with student loan debt
According to a new study from MagnifyMoney, the homeownership rate among Millennials with student loans is just 34 percent — two percentage points lower than those without loans.
Of those with student loans who do own a home, they have higher mortgage balances — a median of $104,000 versus $98,000 — and lower home values. Homeowners with student loan debt have properties valued 5 percent lower than those without it.
The analysis also showed that Millennials with student loan debt have a lower net worth than those without student loans (75 percent less, in fact). They also have nearly $19,000 less saved for retirement and half as much money in the bank.Verify your new rate (Oct 25th, 2020)
It’s not impossible
It’s not all bad news for aspiring Millennial homeowners, though. According to MagnifyMoney’s Rebecca Safier, there are lots of ways this cohort can get ahead on those loans and open the door to better financial health.
“If you can make extra payments, you can get out of debt faster and save money on interest,” Safier said. “Create a budget to see if you can spare any extra cash each month. Look for areas where you can cut down on spending. Some people even take drastic steps, such as downsizing their apartment or selling their car, to get rid of debt as fast as possible.”
She also suggests taking on a side hustle, asking for a raise or considering a career that qualifies for student loan forgiveness — such as teaching or another form of public service. Refinancing can also help.
“Some borrowers could benefit from refinancing their student loans,” Safier said. “If you have decent credit and a steady income — or can apply with a cosigner who does — you could qualify for a lower interest rate than what you have now, as well as choose new repayment terms. As a result, refinancing could save you money on interest and help you pay off your student loans ahead of schedule.”
Get today’s mortgage rates
Millennials now make up the largest share of homebuyers, so hope isn’t lost for these debt-saddled Americans. Shop around and see what mortgage rates you qualify for today.Verify your new rate (Oct 25th, 2020)