Posted by Apex Home Loans ● August 5, 2021

Tips For Saving and Getting Approved for a Home Loan

Young interracial couple with baby touring a home

 

Saving enough money to buy a home can feel like a daunting task. However, with a solid savings plan, you could be on your way to owning your very own home sooner than you think! Below we have listed a few excellent tips for saving for a loan and getting approved for a loan.

Tips for Saving for a Loan:
 
1. Set a Goal
You’ve probably heard that you need to put 20% down in order to buy a home. However, that isn’t always the case. There are different loan types that don’t require 20% down, and depending on the state you live in, there are often grants from housing finance agencies. You might have a good household income, but haven’t saved a lot, so putting less than 20% is a great option if this is the case. If you put down less than 20% at closing, you will most likely need to get private mortgage insurance if it is a conventional loan. This protects the lender and mortgage investor if you default on your loan.
 
2. Build a Budget
Sitting down with your bank statements and a list of all your monthly payments is a great way to start building your budget. Once you have everything in a document, set a definite budget for each category and stick to it. Where are you spending the most amount of your money? Is there something you can cut your spending on? Possibly entertainment, going out to eat, or large vacations can be scaled back and those funds redirected to a “new home fund”
 
3. Cut Down Your Debt
One of the main items that lenders look at will be your debt-to-income ratio. The more debt you have can impact the debt-to-income ratio and the ability to be approved for a mortgage. It’s usually a great idea to pay down your debt as much as possible before you apply for a loan. This can help you get approved.
 
4. Automate Your Savings Account
Are you someone that falls for impulse buying? You might want to consider automating your savings account to help reduce your spending budget. Determine how much you should save per month towards a down payment on the home you’ve been eyeing. Then contact your bank and authorize an automatic withdrawal from your primary account into a separate savings account.
 

Getting Approved for a Loan:

You’ve saved up for a home, now it’s time to get approved for the loan! Below we have listed a few great steps to get approved for a home loan!

1. Clean Up Your Credit
Being in good standing on your credit is very important when apply for a loan. The higher your credit score, the better your approval chances are and your credit score can affect the interest rate you will pay. You can get a free credit report once a year through AnnualCreditReport.com. Once you receive your report, be sure to review it carefully and question anything that doesn’t look correct.

It’s important to stay on top of all your payments in order to keep your credit in good standing. Paying more than the minimum is also an excellent way to maintain a good credit score.
 
2. Set Your Sights on Less Expensive Properties
If you need to buy a home quickly it can cause some financial stress, especially in a tight market where buyers are offering over asking price. Try narrowing your search to condos or townhomes that may be more reasonable so that you can move into your new home within your desired timeframe. Looking at smaller properties can help you save money over time for that larger home you’ve been eyeing that isn’t quite in your budget.
 
3. Consider a Co-Borrower
If you are concerned that your income is not high enough to qualify for a home loan, there is always the option of having a co-borrower. Carefully pick a co-borrower, make sure they have a good employment history, stable income, and good credit history. Even if the co-borrower isn’t going to live with you in your future home, their income and credit will be considered by the lender.

 

Bottom Line For Homebuyers

Don’t let saving for a down payment scare you away from buying a home. Start your homebuying journey off on the right foot by carefully reviewing your finances, creating a solid budget, and consider all financing options. Have questions? Click the link below to connect with our team of mortgage experts!

 

Contact Us Apply Now Get Pre-Approved

 

Topics: Real Estate, Down Payments, Home Buying Tips, Home Buyers, Home Buying Advice, Pandemic Home Buying, Saving For A Down Payment

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