“Student Loans Continue to Burden the Housing Market”

I received a referral from a past client the other day. These folks really wanted to purchase a home, both had good jobs, one in the field they were educated, the other in a completely different field.

Their combined income was 121,000 for 2013. They let me know they had discussed with a Realtor, looking at a $250,000 home, but with their limited down payment, they would require mortgage insurance. They each had a car payments and $14,000 in credit card debt. None of these debts were a major issue. The major issue was $123,000 student loan debts. No matter which way I ran the math, they didn’t qualify for a mortgage to purchase the home they wanted.

If one of the cars were paid off or all the credit cards were paid off, they would qualify. Another alternative was to purchase a home under $200,000, which would mean a lower month property tax and over all mortgage payment.

I know they had their hearts set on this home, but I am not willing to put someone into a home that they can’t afford. It is tough to explain this to someone, but they start to get it, when you ask if it is OK that they have to live for the house and not for themselves.

There are two issues these days that are hurting the housing market, student loans and employment. There are a lot of folks that are under employed or being forced to work less and less hours. Many employers are cutting back hours to ensure that they won’t be required to offer health insurance. Sure there are others as well, but these are two that are right at the top of the list.