Some who do start shopping quickly realize they can’t afford as much house as their income suggests. The more they pay each month on student loans, the less the bank will lend them to buy a house, said Natalie Lohrenz, director of counseling at Consumer Credit Counseling Services of Orange County, Calif. In a pricey market such as Southern California, that can severely limit a buyer’s options.
“You have to think about your quality of life after you purchase this home,” she said. “It’s OK to rent for a while.”
That’s not to say some people don’t make it work.
Marco Manansala is starting to shop for a house, maybe a two-bedroom in Long Beach, Calif., or on Los Angeles’ Eastside, close to a freeway. When he began to think about it, the 28-year-old got preapproved for a loan — but only for $180,000.
“That gets you a shack,” he said. “I asked, ‘How do I get more?’ They said I need to pay down debt.”
So he started aggressively paying off his car, and he’s worked his student loan balance down to $6,000, from $10,000. With a good job as a creative director for a Venice marketing agency, he has cut his spending to save up for a down payment. He’s getting close.
“I have a goal of buying something by June,” Manansala said. “I’m gearing up for it.”
But many others, like Luna, are forced to take a much longer view.
She graduated into the worst job market in decades. Although she eventually found work that enabled her to keep up with loan payments, it’s been hard to save much. In six years, she’s paid down nearly half of her original tab. When she borrowed the money for a master’s in professional writing, Luna acknowledges, she was an “idealistic” 22-year-old, and the numbers didn’t seem real.
Now the reality of a $700-a-month student loan payment makes it hard to get ahead, house or no house, even with a good salary. And she’s worried she’ll get priced out of the city she loves.
“It’s frustrating,” she said. “I think by the time I get a chance to get together that money and find a house, it’ll be unattainable.”
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