You might be wondering how investing in stocks can help you get a home loan. We all know that there are many benefits to homeownership, but getting approved for a mortgage is not always easy with the down economy. Investing in stocks might be one way you can make your money work for you and save for an eventual down payment on your future home.
Secure Your Financial Future
Many homeowners begin to invest in stocks when they are young, but before investing their hard-earned money in the stock market, you need to have a solid foundation by paying down your debts and securing your financial future. You also want to have an emergency fund for unexpected expenses that arise. If you don’t know at least the basics of stocks and stock market investments, take a look at what the stock professionals at https://usethinkscript.com/ have in their stock training. Once you have established good credit, saved up six months’ worth of expenses, and have an emergency fund, you are ready to take the next step toward homeownership.
Investing in Stocks Saves for a Home Down Payment
One common way that people invest their savings is by buying stocks. This can be very beneficial if your long-term goal is to become a homeowner. You do not have to invest a lot of money, and you can easily watch it grow over time. Once you feel that you have amassed enough savings, the next step is to buy your first home.
Home Loans for Investing in Stocks
You might be wondering if lenders will take into account your stocks when they look at applying for a loan. There are several different options for you to consider when applying for a home loan, and investors also have the option to apply as a non-occupant co-borrower on a loan. There are advantages to being a non-occupant co-borrower, but there are disadvantages as well.
Advantages of Being a Non-Occupant Co-Borrower
The advantage of being a non-occupant co-borrower is that you are eligible. If you have enough savings to make the down payment on your home, then it makes sense for you to consider this option. Because investments are considered assets by lenders, they may be able to help you secure a home loan for the full amount of your down payment.
Disadvantages to Being a Non-Occupant Co-Borrower
The disadvantages are that you are not living in the house, so there is no guarantee that you will receive any money back. Plus, if things don’t go as planned and your friend or family member does not pay their mortgage, you will have to pay it for them.
Income from Stocks Can Be Used as a Verification of Funds
You can also include your income from stocks when applying for a home loan. This is beneficial because the lender wants to know that you have enough money to make the payments on your loan, and the documents you give them will show that. Although investing in stocks can help you get approved for a home loan, there are some things to keep in mind while you go through the application process. You do not want to invest all of your money at one time because you need to have a reserve of savings in case of an emergency. You also want to make sure that you and your co-borrower read and understand all the documents you sign so there are no surprises later.
What You Should Avoid Doing
To avoid any surprises, you need to stay away from loans with balloon payments. Although making the monthly payments on a home loan might seem overwhelming at first, it will be better than paying off a loan that has an even higher payment due at the end of only a few years. If you choose this option and cannot afford to pay the balloon payment, you will have to refinance your home just to get out of debt. Also, keep in mind that you cannot move your stocks without informing the lender and getting approval for a new loan. When you apply for a home loan, be ready to show documentation that shows where all your money is coming from. This information will not automatically disqualify you, but it can help when it comes time for your application to be processed.
Making investments in stocks is a great way for you to make your money work for you when saving up for a down payment on your future home. If you are ready to take this step toward homeownership, find out more about stocks and how you can get started saving and investing for your future home.