As student-loan payments are set to resume, Houston-based house hunter Meshawn Cisero is looking over his budget with a fine-toothed comb and cutting expenses as he gears up to pay over $400 a month for his student debt.<\/p>\n
The 33-year-old, who works as a program manager at a startup, has cut back on traveling, going out with friends, ordering food from delivery apps, sharing streaming accounts with other people, and even is holding off on buying a new car. \u201cI\u2019m gonna have to cut back some more, especially when the student-loan payments start again,\u201d he added.<\/p>\n
Cisero graduated in 2012 from a private college, Bentley University in Waltham, Mass., with a degree in business management and $40,000 in student-loan debt. He moved from Boston to Houston the following year in search of a city with a lower cost of living.<\/p>\n
During the pandemic, when student-loan payments were paused, he put the money he saved on his student-loan bill towards a down payment on his future home. He wasn\u2019t alone: In a January report by the Jain Family Institute, the pause in monthly repayments allowed borrowers to budget more towards buying a home.\u00a0<\/p>\n
Cisero also used some of that money to pay other debt, such as credit-card debt. \u201cI felt really good about it,\u201d he said.\u00a0<\/p>\n
But payments on student loans are expected to resume in October and interest on federal student loans will start accruing again in September. Cisero said that while the resumption of payments isn\u2019t going to derail his plans to buy a home, it\u2019s made his financial situation a lot tighter.<\/p>\n
His student-loan debt is the second highest monthly bill he will have outside his rent, or his future mortgage, he said. With the payment pause ending, \u201cit\u2019s definitely going to be an adjustment, because now I\u2019m potentially taking on a mortgage in a couple of months. So it does impact my discretionary income,\u201d he added.<\/p>\n
Real-estate agents are worried about how that could hurt prospective home buyers.<\/p>\n
With mortgage rates at or near 7%, taking on a home loan is already an expensive proposition to many home buyers like Cisero. And in some markets, home prices continue to rise and competition for homes is back.<\/p>\n
For the typical American family earning $75,000 a year, which is about 51% of all households, they can only afford 23% of all homes listed for sale on the market, a big drop from five years ago.<\/p>\n
With student-loan payments resuming, that not only adds an additional recurring monthly payment that increases their expenses, it also means that buyers could be rethinking homeownership in hopes of waiting the market out.\u00a0<\/p>\n
\n \u201c<\/span>\u2018Student-loan debt remains a significant obstacle for millions of Americans wishing to become homeowners, and with mortgage rates on the rise, the impact of student debt will become even more acute.\u2019\u201d<\/span>\n <\/p>\n
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