I ran across this article in The MReport that was interesting. It cites a study that shows paying off student loans early is a stepping stone to purchasing that first home.
Student Loans vs. First Mortgage
Borrowers paying off a student loan early are 31 percent more likely to take out their first mortgage loan in the year following the payoff. This according to a study by the Bureau of Consumer Financial Protection (BCFP), that analyzed borrowers’ use of credit as they approach and made their final student loan payments.
The study found patterns that highlighted the interconnected nature of borrowers’ finances, as repayment of one type of debt affected payments and borrowing on other types of debt. “This research can help us better predict the impacts of new policies or products on homeownership, credit card use, and the broader economy as a whole,” BCFP said.
Looking at the months following the pay off of a typical 10-year student loan, the study found that borrowers paying off a student loan early also reduced their credit card balances and made large payments on their other student loans at the same time as well as taking out their first mortgage in the year following the payoff.
The study said that this pattern shows a link between the timing of student loan payoffs and home purchases. It also shows reduction in credit card and other student loan balances suggested that increased wealth and income could “influence when borrowers pay off student loans, reduce credit card balances, and purchase homes.”
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Are you at this junction in your life?
Contact us and we will be glad to help you on your journey! There is so much more to purchasing a home than just finding The House!