While college-educated workers usually pull down higher incomes than those who do not obtain a post-secondary degree, a new report indicates that many new college graduates will be unable to obtain a mortgage because their student loans will push their debt-to-income ratio too high.
Student loan debt soared to $1 trillion this year. The report from Young Invincibles, “Denied? The Impact of Student Debt on the Ability to Buy a Home,” found that today’s college graduates are actually worse off than previous generations, financially speaking. The authors estimate the average 30-year-old college graduate looking to purchase a home would need to spend about half of his or her monthly income on mortgage, student loan, credit card, and car payments, leaving them ineligible for many home loans, including those guaranteed by the Federal Housing Administration.
“As education debt grows, it pushes more borrowers out of the housing market, potentially adding another drag to an economy only just emerging from the Great Recession,” said Rory O’Sullivan, policy director at Young Invincibles.
The report does not factor in credit scores or down payments, which also greatly affect mortgage attainability. Please provide your thoughts.
Source: “Student Debt Pushes Homes Out of Reach,” Pittsburgh Post-Gazette (08/21/12)
More see now is a good time to buy! Home buyers may begin to jump off the sidelines this spring as they get more urgent about purchasing a home, fearing that home price and mortgage rate increases are on the horizon.
Housing surveys in recent weeks have shown that more Americans are seeing now a great time to purchase a home. In the most recent survey, 73 percent of Americans say now is a good time to buy, according to the latest Fannie Mae Housing Survey conducted in March. That’s up from 70 percent in February who said it was a great time to buy.
“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice.” Is your local market concurring these forecast?
Indeed, more buyer urgency is evident in the market. Thirty-three percent of those surveyed by Fannie say they expect home prices soon to increase, which is the highest percentage in a year. What’s more, nearly 40 percent say they expect mortgage rates to rise in the next year too, which is also up from previous surveys. We recommend checking with a local lender for your qualifications, down payments and loan type.
Source: “More Americans Think It’s Time to Buy a Home,” MSN Real Estate (April 9, 2012)