1.     Pay off any debts to qualify for loan approval – When starting the home buying process your lender will primarily look at this aspect of your finances. Having outstanding debts can interfere with the process as lenders focus on your debt to income ratio. Any chance given to pay them off can better your chances of approval.

2.     Pay off credit cards for higher credit scores –  Paying off your debts can help to raise your credit score and make it easier for you to get new credit, such as a mortgage loan. Consult with a mortgage lender to get a clear understanding of which debts to pay off to better increase your score.

3.     Can be used as a down payment – Depending on your type of loan a down payment may be required. This down payment can vary in percentage starting anywhere from 3.5% – 5% of the total cost of the home. A tip to keep in mind…the more you can put down on top of that percentage the lower your monthly mortgage payment will be.

4.     Paying Closing Costs – These are fees associated with the closing of the home. The closing cost can vary anywhere between 3% – 4% of the total value of the home.

5.     The money can be saved to purchase home improvement items – Getting over the process of obtaining your dream home is a great feeling but you should always save money aside for the little things you want to change to make it perfect and / or any repairs that may arise.