individuals should examine their current spending habits and determine where they spend the most money and how they can trim those expenses down.
Chicago, IL (PRWEB) September 22, 2015
Many of today's interested first-time home buyers are also battling a mountain of student-loan debt. The Federal Savings Bank knows that the overwhelming responsibility to make these payments can make it difficult for young adults to save for a down payment and some individuals feel applying for a home mortgage isn't even in the cards.
Fortunately, there are ways these individuals can still afford a home.
Decrease the debt-to-income ratio
One factor that determines qualification for a home loan is the debt-to-income ratio. With this ratio, a lender can figure out how much is coming in and how much must go out. Armed with this information, lenders have a better idea whether an applicant can afford monthly mortgage payments.
By either lowering debt or increasing income, individuals can increase their chances of qualifying for a better loan product. Moving debt around is one potential solution to leaping over the debt-to-income ratio hurdle.
Provide a larger down payment
Another way to improve a young adult's chances of qualifying for a mortgage is by saving up and contributing a more significant down payment. The Federal Savings Bank suggests individuals should examine their current spending habits and determine where they spend the most money and how they can trim those expenses down.
In addition, celebrating hitting milestones while saving money can be quite motivational. Interested buyers should consider treating themselves to a nice dinner out or a weekend road trip after saving, say $5,000 or $10,000.
Whether customer, reality, or trusted referral source, The Federal Savings Bank understands how important every purchase or refinance transaction is to help our clients optimize the purchase or refinance of their home.