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3 Tips to Applying for a Loan

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As a mom, I make hundreds of decisions in a day to take care of my family. I keep track of schedules, manage my small business, and work to ensure everyone is happy and healthy every day. Making the right choices for me and my family is my top priority, and applying for a loan is no different. Here are my tips to make the process of applying for a loan as easy as possible. 

pennies coming out of a tipped jar

Do your research

There are many reasons to apply for a loan. Maybe your family is growing and you need a bigger home or perhaps you’re hoping to take your business to the next level. No matter the reason, one of the first steps any smart mom will take is to do her research and get familiar with her options. Several factors will determine what kind of borrower you and your family are and what kind of loans you need. For example, depending on where you live, some states have local assistance programs for families looking to take out a loan. Or, if you or your partner served in the armed forces, you can look into VA rates in order to take advantage of benefits that you qualify for as a veteran. If you own your own business or work freelance, you may want to familiarize yourself with alternative loans that are intended specifically to work with the consistency of your income. Whatever category your family falls into, the more information you have, the easier it will be to find the lender and the loan that is best for you.

 

When applying for a loan your finances will be scrutinized, it’s just part of the process. While this can seem stressful, it doesn’t have to be! Taking a little time to get organized can make you feel more confident before applying. This is especially important if you own your own business, as it can be difficult to provide the same types of income verification as regular W-2 employees. Using personal finance software or a budgeting app can help to streamline this process. This can also be an excellent opportunity to educate your little ones on the basics of money management, so don’t be afraid to include the whole family!

personal calculating finances

Put your best foot forward with an awesome application

Once you’ve decided on a lender, it’s time to take the final step and apply for a loan. You want to present the best possible picture of you and your family’s finances when you apply, to make sure you get the best possible terms. Two aspects of your finances that banks will focus on are your debt-to-income ratio (DTI) and your credit score. When considering applying for a loan, working on both of these will allow you to put your best foot forward. To optimize your DTI, the percentage of your income that goes towards debt, the easiest step to take is to pay down debt quickly. This will free up a larger percentage of your income, making you more attractive as a borrower. To raise your credit score, focus on paying your credit card bills on time and above the minimum. In the hectic day-to-day of family life, it can be easy to forget to do this! Setting your payments to send automatically can help facilitate this process, so you don’t have to remember every time. By working on these two numbers, you can set yourself and your family up for success.   

Applying for a loan for your family can be intimidating, but by following these 3 tips, you can help your family get on the right track to get the loan you need.

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