How to Save Money for Your Down Payment

The more you can save for the down payment on your new home the better. This will be a sizable amount of money so you will need to plan accordingly.

Unless you have a lot in savings, there is no way to come up with the money quickly. The more you are able to pay down, the less your mortgage payment will be each month.

While some loans do not require asset verification, many do. Most lenders want to verify the money source. This is, in part, a quality control feature used for fraud protection purposes, and partly used as an underwriting tool that will determine your borrowing qualifications.

The key is to document the funds are coming from your personal savings. This will instill confidence in the lender that you will be a strong borrower. A savings history will indicate your financial situation is stable. This stability will make you eligible for a bigger loan, which will enable you to buy a bigger home. A high credit score will also help increase your loan amount. The end result of a bigger loan amount, however, will also mean making a larger down payment.

If you are able to verify you have additional assets that are not needed for the down payment they will work in your favor. They will be considered reserves you can draw from in times of financial difficulty. There are many circumstances that can cause problems. These include: the need to file unemployment, medical emergencies, and other unexpected situations that may arise.

Documenting additional assets will also demonstrate your history of saving money. This makes you a dependable borrower in the eyes of the mortgage companies.

Start saving as early as possible. Even if you won’t be in the market to buy a home in the near future, it will serve you well to begin saving very early in the game. This is all a part of the planning process. The sooner you begin putting money back, the more you’ll have when the time comes.

Invest your money carefully. This will allow you to make money and will look favorable to the lending companies.

Establish a plan. Decide how much you will save each month and stick to that amount. Treat it like any other bill that must be paid on a regular basis.

Think within the realm of what you can afford. While buying a big home is certainly a desirable prospect, doing so may not be within your budget. Instead, start out small and work your way up. This is especially relevant if you are a first-time home buyer. You’ll be able to use the money you make off the sale of that home to help pay for the next.

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