Student Loans + Mortgage Payments: How To Manage Them Both

Calculation of mortgage loan and signed agreement for the purchase of a new house top view

Student loans are a familiar financial struggle. With over 40 million Americans in student loan debt, and the average income not rising to compensate, many young adults are foregoing other major life events.

However, there comes a point when postponing marriage, home ownership and ample savings becomes concerning as well. Being burdened with more than one substantial debt can seem simultaneously both inevitable and impossible to surmount; sometimes it feels like there is no alternative to carrying multiple loans and overall debt doesn’t seem manageable.

It doesn’t have to be.

When managed responsibly, balancing more than one debt can actually help your financial portrait and not leave you jumping life-delaying hurdles.

Can I Even Afford To Buy A Home?

The first hurdle many young Americans face when considering student loan debt and purchasing a home is the fear that it will be impossible to receive approval for a mortgage.

Being approved may involve some finagling, but that is another student loan debt misconception that can easily be handled. — student loan debt does not mean mortgage approval is not possible. Reducing monthly payments, refinancing and consolidating can all help minimize debt-to-income ratios – the number lenders look at to assess ability to handle debt repayments.

Additionally, when planning happens early and is seen as a financial priority, balancing multiple debts can be a strategy for bolstering credit scores.

Early Planning Steps:

1. Maintain healthy credit. Pay down smaller balances. Make regular and timely payments.

2. Consolidate debt where applicable.

3. Evaluate living expenses and work toward minimizing outflow and maximizing inflow.

4. Do not take on more unnecessary debt.

5. Set realistic goals. Do not purchase more home than you can afford.

I’ve Got A Mortgage, Now What?

The next big hurdle is how to keep up the balancing act. Becoming a homeowner is a huge, long-term responsibility and should be treated as such.

Juggling And Balancing Steps:

1. Keep it up: Budgeting takes effort and determination. Budgeting with multiple debts requires even more effort and determination.

2. Reassess: Check in with the original plan and the ultimate goal.

3. Stay motivated: Above all else, don’t give up. A half-actualized budget is not “good enough.” Success comes from taking control over your financial situation and maintaining that control.

First of all, don’t stop. Keep making regular payments on all debts. If you recently reduced the monthly payment amounts, but find yourself with more leeway than you anticipated, pay extra each month on the principle.

Next, reevaluate often. If any element of your financial portrait changes, that can affect your overall financial health. Income changes, medical expenses, unanticipated life events – these can all change how you handle debt. By keeping tabs on all of the puzzle pieces that make up your financial composite, you can avoid difficulties down the road.

Avoid defaulting at all costs. While rehabilitation is possible post-default, the delinquency will remain. The best course of action is to meticulously plan for uncertainty and be proactive.

Finally, don’t be discouraged. Budgeting is a lifelong habit, not a life preserver used only in emergencies. When budgeting becomes a way of life, it becomes second nature. The steps may seem overly cautious and painstaking, but with a well formed financial plan and the wherewithal to stick to it, multiple goals can easily be attained. Over time, having a mortgage on your credit report can have a very positive impact on your credit score (as long as payments are made regularly and in full).

The Bottom Line: Reality And A Moment Of Truth

Student debt does not need to stop you from affording a home. Nor does a mortgage payment need to hinder paying off your student loan debt. Both debts can be simultaneously handled; plan adequately and stay the course.

Before making any large financial decisions, always evaluate your current situation and take the time to draft out how your day-to-day life will change financially. Be honest when assessing what you can truly afford.

While homeownership is often considered a sign of adulthood, recognize your own situation’s obstacles. Do not act on what you “should’ be doing as an adult. Financial responsibility is more than material things.

As Miranda Marquit has said, “Being able to step back and put your overall comfort and stability ahead of the desire for a big house is an indication of financial maturity and readiness.” Being in control of your finances shows more responsibility and maturity than any physical thing could.

Don’t let your desire for material success hinder your ability to live. Find fulfillment in providing for yourself and your family.

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