Student Loans, Down Payments and Savings Strategies
If you assume student loans are going to get in your way of saving for a down payment to put towards a house, you may be surprised to learn they may not affect you at all. In some areas home buyers with student loans actually save faster than those without, and in select cities, such as Rochester, New York, it took both parties the same amount of time to save. Every home buyer’s situation is unique, but you may be surprised to discover that student loans will not necessarily cripple your home buying abilities.
Deciding Factors
There are a few factors that determine the rate in which people with and without loans save for a down payment. Having these loans obviously increases your debt-to-income and decreases the amount you have to save every month. However, those with a college degree generally end up making more long-term than those without. That being said, a brand new graduate may make less initially than someone at a job without a degree. Plus, they will be paying on their loans. Salary and loan payments are not the only influences on saving though.
Location, Location, Location
You have been dreaming since well before you graduated to move to the West Coast once you had your degree. Well, before you do, you need to consider the cost of living and real estate prices. With San Francisco’s year-round beautiful weather and fantastic job market it’s easy to understand why so many relocate to the area. However, you may also be interested to learn that the average college graduate takes 30 years to save for a down payment. San Diego, Los Angeles, San Jose, and Fremont all have similar statistics.
Not only do the above mentioned areas have more expensive housing than other cities, they have a higher cost of living, too. So, even buying groceries or stopping in for a beer during happy hour is going to cost you more, too. Factor in your student loans and you will be shelling out a lot of money just in bills. It may seem like not having student loans would be an advantage, but long-term it is much more likely that your income will increase while the career of someone with a degree may hit a plateau.
If you have student loans it may feel as though you are never going to be able to save enough for a mortgage. However, if you look in the right area and cut unnecessary expenses, you may not even feel affected by your student loans.