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HANDY, ESQ.  \nStudent Loans Will Change the Way you Buy a House  \nHome ownership—whether you view it as an investment or just want to be free from a landlord—is likely to be one of the first major assets that you purchase as a young lawyer. The Federal Reserve has estimated that, for each $1,000 increase in student loan debt there results in a 1-2 percent decrease in the home ownership rate among people between 24 to 32 years of age. 1  \nAccording to Above the Law, somewhere around 2 million Americans  \nowe $100,000 or more in student loan debt.2 With the median price of homes sold in Nevada now being about $288,400,3 debt incurred during law school is likely to cost almost as much as purchasing a home, which presents a wealth of challenges for keeping your budget, and your life, balanced.  \nLet me begin as any attorney should, with a disclaimer: I am not an accountant, certified or otherwise, nor am I a banker, lending agent, broker, financial planner, tax preparer, guru or life coach. None of what follows is advice of any kind, just my two cents based on my personal experience of buying a home with what is seems like insurmountable student loan debt. This article will discuss one narrow aspect of the home-buying experience, the debt-toincome ratio, and how student loan debt affects the debt-to-income ratio and the ability of a homebuyer to prove it.  \nPurchasing a home can be an onerous process. You’re probably sure you know where to start—by setting a  \nbudget for yourself. Doesn’t it just comedown to one question: What kind of payment will I be able to make during the next 15 to 30 years? Before you rush to an online loan payment calculator, you should first consider your debt-toincome ratio.  \nWhen considering whether to put up the money on your behalf to purchase a house, lenders will want to determine your debt-to-income ratio, or DTI.4 A DTI is usually expressed asa percentage, being the portion of your monthly income being reduced by debts. Some types of loans have a minimum DTI, such as a Federal Housing Administration (FHA) loan, and lenders will require that your debt not exceed the minimum percentage of your income. Remember, your debt will include not only your expected home loan payment, but also insurance and taxes on the home, as well as any recurring debts, such as car payments and recurring accounts such as credit cards and other loan payments.  \nIf you are a recent law school graduate, you probably owe more in student loan debt than you had anticipated and are working for less than you had hoped.5 You may need to decrease your monthly student loan payment to qualify for decent rates or particular loan types. Consider loan consolidation6 and/or opting for an extended or income-based repayment to lower your monthly payment, which will lower your DTI and increase the likelihood of eligibility for more attractive loans and rates.7 If you need to reduce other debts you have already incurred, you may want to do this awhile before you make the decision to buy a home in order to free up funds to pay down those debts.  \nOnce you’ve reduced your DTI, found your perfect home, and worked with a lender to get them to offer you a loan you are willing to accept, you will need to prove your ability to make the payments at the DTI you have dedicated so much time and effort establishing, including obtaining a loan verification letter (also called a credit reference letter) from your loan servicer. The letter is a snapshot statement that provides the current payoff amounts of the loans, and the outstanding principal and interest amounts, as well as your monthly payment obligation.8 This letter has become easier to obtain in recent years, often being available on request from your servicer’s website.9 However, if you are on an income-based repayment plan, you may need to apply for re-certification at the time you need to provide the letter—or you may end up with what I received—a letter that showed ","cbCairF9zzlsGcV5","https://ap.wps.com/l/cbCairF9zzlsGcV5","pdf",448597,"English","# Student Loans and Home Ownership for Young Lawyers\n## DTI and Lender Requirements\n## Reducing Payments and Improving Loan Eligibility\n## Proof of Repayment Ability: Loan Verification Letters\n## Getting Help During the Home-Buying Process","[{\"question\":\"What documents may a borrower need to prove repayment ability to a lender?\",\"answer\":\"The article highlights obtaining a loan verification letter (credit reference letter) from the loan servicer, which summarizes payoff amounts, outstanding principal and interest, and monthly payment obligations. It also advises contacting the servicer and being persistent, especially if re-certification is required for income-based plans.\"}]","Student Loans Will Change the Way you Buy a House - Debt-to-Income Ratio and Homebuyer Proof | PDF",1789514487]