One of the best things that follow finishing your college education is getting your own place. In many aspects, it marks the beginning of an individual’s independent life. However, houses are often very expensive, and making the steps necessary to buy one requires a serious long-term commitment and can put you under considerable financial strain. This is especially true for individuals who have not yet paid off their student loans.
While it may seem better to rent until you finish paying off your debt, you will still have to spend money to have a place to live. On the other hand, if you get a house, you will have to make monthly payments for it on top of the ones for your student loan. However, once you finish returning the money that you’ve borrowed, you will have a place of your own, and that you won’t have to pay rent for.
This having been said, things are often more complicated. Buying a house is a big investment and a lot of thought should go into your decision. One of the most important things that you can to figure things out is to look at the situation objectively.
What are the actual advantages of buying a house while still making payments for your student loans?
While the list may seem short, there are actually a lot of advantages to buying a house while still repaying your student debt:
- Real estate prices constantly rise
The prices of houses and apartments are constantly on the rise, as cities become more crowded. This means that the longer you wait before buying a house, the more money you will have to spend. It is not unreasonable to estimate that the house that you may be able to afford this year may prove to be too expensive.
- Student loans do not have a large impact on your credit rating
While student loans do show up on your financial records, they do not have a considerable impact on your credit score. Furthermore, they often come with very low interest rates when compared to other types of loans such as payday. This can make it easy to manage both the monthly payments for the loan as well as the mortgage on a house.
- There are many ways to handle the student loan debt
Additionally, it is important to keep in mind that it is possible to take advantage of a student loan discharge program offered by companies and volunteer organizations. The laws that govern these forgiveness programs are constantly changing and you should always keep an eye out for ways to solve the issue of your student debt as fast as possible.
- Professionals recommend it
If you can make a down payment on your house, your monthly rates will be smaller, making it easy to manage both your student loan as well as your mortgage. From a financial point of view, specialists claim that owning a home should always be a priority since it offers more personal stability, and can also be used as collateral for future loans.
The disadvantages of buying a house while you are still repaying student loans
The biggest disadvantage is that if your student loan has a variable interest rate, you may end up having to pay considerably more than what you expected when you bought the house. This can make it extremely difficult to pay both the loan and the mortgage, especially as your student debt accrues interest.
It is also worth mentioning that if you do not plan things accordingly, you may end up unable to pay your mortgage, which may lead to you losing your house. If the economy is unstable and a recession catches you with a lot of debt, you will have a lot of difficulties keeping up with all of your monthly expenses.
Lastly, getting a house while also making payments on your student debt will put you under considerable financial stress, which can make it difficult to make other important steps in life, such as having kids. Truth be told, having to pay both the student loan debt and the mortgage will limit the things that you can spend.
Regardless of what you choose to do, always be mindful of what could happen if you lost your job or if you realized that you are expecting a child. Any reduction in income or additional expenses will be more difficult to manage, at least for a couple of years until you finish repaying the student debt.
This having been said, if the economy is stable and you have a long-term job, it may be better to buy a house as soon as possible. This will give you more stability and should be the cheaper course of action, especially if you find an affordable house in a neighborhood where real estate prices are likely to explode.