27 Tips For Finding The Top Travel Deals

27 Tips For Finding The Top Travel Deals

Planning a great vacation for a price you can afford can be a challenge. And, as more people hit the roadways, railways, and skyways post-pandemic, finding good deals may take a bit more detective work than usual.

But that doesn’t mean you can’t enjoy a fun and affordable getaway with your family, friends, or on your own this year. We’ve got tips and tricks that can help frugal travelers score deals on everything from flights to complete vacation packages.

How to Find the Best Vacation Deals

Here are 27 insider tricks and smart travel hacks that can help keep vacation costs in check.

1. Using Credit Card Rewards

If you’ve racked up a large amount of reward points on your credit card, you may be able to redeem them for free or reduced-price airfare, hotels, car rentals, cruises, dining, and other travel expenses. Some credit cards also offer free trip cancellation insurance, auto rental insurance coverage, and lost luggage insurance.

2. Looking Into Local Destinations

One surefire way to slash vacation costs is to take airfare out of the equation. You might want to consider taking a road trip to some not-too distant destinations. For ideas on where to go and what route to take (along with local deals), you can check out AAA’s TripTik .

3. Going Where the Dollar is Strong

If you travel to a country where the U.S. dollar is strong, your money will go farther than it would at home, or in a country where U.S. currency is weak. Before booking travel, you may want to check out X-Rates’ currency exchange table to find out how the U.S. dollar is stacking up to other currencies.

4. Traveling During “Dead Zones”

There are two times of the year, the so-called “dead zones,” when travel tends to be cheapest: Early December (after the Thanksgiving rush but before the Christmas travel season) and the last three weeks in January into early February.

5. Being Flexible With Your Destination

If price, rather than a place, is the prime concern, you may want to use a destination search engine like Skyscanner. You can plug in your origin and some potential travel dates and then see flight prices for destinations across the country as well as around the world.

6. Getting a Vacation Package

Buying a vacation as a package, rather than booking your flight, hotel, and rental car separately can often yield significant savings. It’s a good idea, however, to keep an eye out for resort fees and airline baggage fees, which aren’t always included in the package price. A few places to find travel packages include Expedia, Priceline, Kayak, and Costco Travel.

Recommended: 10 Tips for the Cheapest Way to Rent a Car

7. Comparing Airbnb and Hotel Prices

Before booking a hotel, you may want to do a quick search on Airbnb and other short-term home rental sites. Even if you’re only staying a few nights, a rental could end up being cheaper than a hotel room. It may also come with a kitchen, which can help you save on dining as well.

Recommended: 25 Things to Know When Renting Out an Airbnb

8. Signing up for Fare Alerts

Rather than checking airfares every day (or every hour) looking for them to come down, you may want to set up a fare alert for one or more destinations and dates at a travel site like Google Flights or Kayak. You’ll receive an email (or notification on an app) when the price of the flight changes.

9. Booking on the Right Day

The day you book your flight typically doesn’t make a huge difference in price. But surveys show that if you’re booking at least three weeks in advance, you may be able to save some money by buying your airfare on a Tuesday. If you’re booking last-minute, however, you may get your best price by snagging your tickets on a Sunday.

10. Not Booking too Far in Advance

The lowest prices on domestic flights are typically available about 45 days in advance of departure. For international flights, you may want to book about 75 days out to get the cheapest flight.

11. Eating Like the Locals

Tourist traps like well-known restaurants can end up being expensive–and crowded. Instead, you may want to chat up some locals and ask for their restaurant recommendations. Another fun–and affordable–option is to hit the farmer’s market, pick up some locally grown or sourced ingredients, and then cook a meal at your rental.

12. Opting to Stay With Friends

Staying with friends can be a great way to save money on vacation. You can end up saving not just on lodging, but also laundry, meals, and transportation with the help of your friends. Of course, you’ll likely want to pitch in and chip in any way that you can to show your appreciation.

13. Paying With a Credit Card Overseas

One easy way to save when you’re vacationing abroad is to use a credit card for most or all of your spending–preferably one that avoids foreign transaction fees. Credit cards typically give you the best exchange rate of the day. Plus, you may be able to rack up rewards, and also get fraud protection.

14. Looking Beyond Tourist Attractions

Just because a destination is known for a certain attraction, doesn’t mean you have to go there. You can often get to know a place just as well, or even better, by going on a free or low-cost walking tour or by checking out the local parks, neighborhoods, and cafes on your own.

15. Checking out Public Transportation

While hopping into an Uber or taxi can be convenient, the cost of these trips can add up quickly. You may want to Google the public transportation options before calling a cab. They may be just as, or even more, convenient.

16. Flying at Odd Times

You can often get a good deal on a flight by going when no one else wants to, such as early mornings and late nights. The cheapest days to fly tend to be Tuesdays, Wednesdays, Saturday (afternoons), Thanksgiving, and the eves and days of Christmas and New Year’s.

17. Contacting the Hotel Directly

Hotel price aggregator websites may not always have the lowest prices. It can be worth contacting the hotel directly and getting a quote. Even if the price listed on a travel site is lower, you may be able to get the hotel to match it. Booking directly could be better because the hotel’s cancellation policy might be more flexible.

18. Using Groupon

Groupon can be a good place to check for deals on hotels and resorts in popular destinations. The site can also be useful for finding discounts on local activities and dining that you can use once you get to your destination.

19. Trying a Travel Auction Site

At travel auction websites, such as SkyAuction.com , companies will list hotels, flights, or packages, and then travelers can bid on them. It can be a good idea to understand what fees will be additional (and not included in the auction price) before you bid.

20. Checking Into “Senior” Discounts

Even if you’re under 65, you may qualify for a senior discount. Some airlines, hotels, and rental car companies offer discounts to adults age 55 and over, and a few offer senior prices to anyone over 50.

21. Researching Student Discounts

If you’re a student, carrying your student ID and asking if you can get a student discount can pay off. You may also want to check out StudentUniverse, which offers exclusive deals on flights, hotels, and tours to students and adults under age 26.

22. Consider Going on a Cruise

Depending on the cruise line and destination, going on a cruise could end up being cheaper than paying for a flight and hotel accommodation in the Caribbean or other beach destinations. To find deals and current promos you may want to sign up for e-letters from the major cruise lines.

23. Adding Items to the Cart (but not Buying)

Sometimes travelers can snag deals by adding an item to their cart, but not going through with the purchase. This shows the merchant that you’re interested in making a purchase but may need some persuasion to actually go through with it. The merchant may then send you a coupon in order to get you to buy.

24. Signing Up for Loyalty Programs

If you travel frequently, being loyal to one particular airline, hotel chain, or rental car company (and signing up for their loyalty programs) can pay off. You may be able to rack up enough points or miles to get discounts and freebies on future travel.

25. Avoiding Baggage Fees

These days airline tickets often do not include the cost of checking a bag. To keep baggage fees down, you may want to see if you can get away with just a carry-on. Other ways to minimize baggage fees include: signing up for the airline’s loyalty or “frequent flyer” program, getting an airline-branded credit card, and weighing your bags before you leave home (to avoid excess weight charges).

26. Finding a Flight With a Layover

You may be able to visit an additional destination for free, or a minimal additional cost, by booking a flight with a 24 hour-plus layover. A number of international airlines offer a free stopover within their home country when you are en route to another country.

27. Fighting Back Against Resort Fees

Some hotels will tack resort fees onto your bill that you weren’t expecting–and significantly inflate your bill. You may be able to get these fees removed if you are a rewards member with the hotel, or if there were any problems with your stay. To make sure you have time to negotiate, you may want to ask for a copy of your final bill the night before you check out.

The Takeaway

Pent-up demand for travel can make reservations–and deals–a little harder to come by these days.

But by doing a little bit of extra research, signing up for travel alerts, and being flexible on when and where you want to go, you may still be able to score great prices on airfare, hotels, rental cars, cruises, and more.

Ready to start planning–and saving–for your next getaway? With a SoFi Money® cash management account, you can separate your savings from your spending while still earning competitive interest on all your money.

Start saving for your next vacation with SoFi Money.

Photo credit: iStock/onurdongel


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SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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31 Real Estate Listing Terms Explained

As you read real estate listings, you may come across industry jargon and certain catchphrases again and again. Paying attention to and understanding these terms can provide valuable clues about the home and the seller’s situation.

What follows is a real estate glossary that can help you decipher listings and figure out what a realtor is really saying about a property.

Real Estate Listing Terms Decoded

Real estate has a language all its own. To figure out which homes may be worth looking at, and which might not, you may want to use this handy real estate translator next time you peruse the listings.

1. Cozy

While this descriptor may bring to mind a comfy armchair and a steaming mug of cocoa, in real estate, “cozy” tends to mean “small.” The home may have minimal square footage, meaning each room may have very limited space.

2. Charming

“Charming” is often another code word for a house with a small footprint, and may also indicate an older construction — which may, indeed, be charming, but might also end up needing costly repairs and renovations.

3. Cottage

This is yet another word that sounds like it’s invoking a feeling when it may really be invoking a size — and that size may be on the smaller side. Cottages tend to be one- to two-bedroom houses and, again, might also be dated.

4. Hidden gem

These words might indicate a nice home in an out-of-the-way location or a home in a popular and trendy locale that needs some work. Either way, it can indicate that the property offers a great opportunity for the right buyer, though you may have to put in some work or make some sacrifices.

5. Investor special

That sounds like a good thing, right? But a real estate agent might use this phrase to mean a house is in pretty rough shape and will take significant work to make livable– as in, you may only be able to buy it for cash or with a rehab loan.

6. Fixer

A listing agent may use this term as a shortening of “fixer-upper.” In other words: major renovations are likely going to be needed.
Recommended: The Cost of Buying a Fixer-Upper

7. Good bones

A home with “good bones” is typically one that needs some renovation and repair, but whose original construction is solid and whose layout is desirable. In other words, the skeleton of a great home is there, but you may need to do some work to flesh it out.

8. Move-in ready

Here’s a phrase you want to see in your real estate listings: “Move-in ready” typically means a home doesn’t need any major, mandatory repairs and is ready for you to start living in as soon as you’ve closed on the property. Of course, this term does indicate that the seller probably has a lot of leverage to demand the highest possible offer on the home

9. Turnkey

Basically a synonym for move-in ready–just turn the key and you’re all set to go!

10. Lives large

This indicates that the home may appear small in terms of square footage, but when you are actually in the property and walking around, it feels a lot more spacious.

11. Room to roam

A home with “room to roam” is typically one with a larger-than-average lot with lots of room to create outdoor living/play spaces or grow a garden.

12. As-is

If you see the words “as-is” in a real estate listing, proceed with some caution: This typically indicates that there are repairs or renovations that need to be done that the current owner is washing their hands of and passing off to the buyer.

13. Handyman special

This is another term that can indicate that a property needs a lot of work — thus making it a good opportunity for a handy homeowner, since the house may be priced lower than other, more turnkey, homes in the area.

14. Priced to sell

“Priced to sell” often indicates that the seller is pretty set on the price they’ve offered–you probably won’t be able to negotiate it down too far or get anywhere with a low-ball offer.

15. Serious buyers only

This term is usually meant to keep casual browsers or open-house visitors who are “just-looking” at bay. The seller likely doesn’t want to waste their time with people who aren’t seriously considering making an offer.

16. Custom

While “custom” sounds cool, it may or may not be. This term indicates that the property includes some built-to-order features or additions that appealed to the previous owners. These features, however, may or may not be to your taste.

17. Unique

“Unique” is another word that can go either way. It could be used to describe a lovely, one-of-a-kind feature, like a rooftop patio. Or, it could be used to describe something odd-ball, like a sunroom converted into a photographer’s darkroom.

18. Loft

“Loft” indicates that the home is large, open, and airy, with high ceilings and few interior walls. The bedroom, for instance, may be situated on an open second-floor landing that looks out directly onto the living room below. This may make for a picturesque living situation, but also one with relatively little privacy, so depending on who you live with, take heed.

19. Vintage

You might be able to guess from the name that “vintage,” when it comes to real estate listing terms, is generally code for “really outdated.” Those 1960s appliances might look cute in the pictures… but how much more life do they have in them before they need to be replaced?

20. Rustic

At its best, “rustic” might mean natural wood fixtures and a kind of casual, barn-inspired theme. At its worst, “rustic” might mean old, unprofessionally constructed, or poorly maintained.

21. Modern

Here’s a tricky one. Although you might assume “modern” means that a place is newly constructed and contemporary in style, it can also refer to mid-century modern, an era of architecture and design that took place between the 1930s and 1950s.

22. Great potential

In a similar vein to “good bones” or “hidden gem,” a home with “great potential” is typically one that provides an opportunity for the right buyer — but which likely needs some work to get there.

23. TLC

Short for “tender, loving care,” TLC is yet another term in real estate listings that typically indicates the home in question needs some renovations and repairs before it’s comfortable — or even livable.

24. Well-maintained

This is another term that sounds good on its surface — and might be! However, it can also be a yellow light. “Well-maintained” often indicates that a property has some age on it. (After all, if it’s new, there’s nothing that has needed maintenance yet). An older home isn’t automatically a bad thing, but it does mean you may be faced with upgrades or appliance replacements sooner rather than later.

25. Original details

As with “well-maintained,” “original details” suggests that the home has some older features that you may love, but may also require some maintenance/upgrading in the future.

26. Up-and-coming neighborhood

An up-and-coming location is one that might actively be evolving or drawing new residents. However, it can also indicate that the neighborhood may still contain a fair number of run-down homes and have a way to go before it’s considered a hot housing market.

27. Built-ins

Built-ins are features like bookshelves, benches or cabinets that are permanently built into the home itself, and are fairly common in older construction. Built-ins can be charming and convenient, but can also limit the flexibility you have in arranging and decorating the space as you see fit.

28. Motivated seller

“Motivated seller” may mean almost the opposite of “priced to sell” (above): It indicates that the seller is motivated to make a deal go through and may be willing to hear lower offers or make negotiations in order to get it to happen.

29. Location, location, location

Perhaps one of the most common real-estate-related catchphrases, if a listing puts a heavy emphasis on a property’s location, it could potentially indicate that the house itself leaves something to be desired (even if the location it’s in is fantastic).

30. Natural landscaping

“Natural landscaping” might indicate that there’s actually very little landscaping at all. Rather, the property might have lots of wild-growing flora that needs to be cleared to create an organized outdoor living space.

31. REALTOR (in all caps)

Although “real estate agent” and “realtor” are often used interchangeably, REALTOR is actually a term trademarked by the National Association of REALTORS (NAR) . Real estate agents can only use the title REALTOR in all caps if they are members of NAR, and adhere to the organization’s strict code of ethics.

The Takeaway

If you feel like property listings are sometimes written in a foreign language, you’re not entirely off-base. Listing agents often use terms that may be well-known in real estate circles, yet are unfamiliar to the average first-time home-buyer.

Agents may also use vague-sounding terms and phrases to make a home’s less-appealing qualities sound more attractive.

Knowing how to decode real estate listings can be a great first step toward finding the perfect home. Another step you may want to take is to pre-qualify for a mortgage.

SoFi offers home loans with as little as 5% down. It only takes two minutes to find out if you pre-qualify and what your options are for potential rates.

House hunting? Learn more about SoFi home loans today.

Photo credit: iStock/irina88w


SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Cash-Out Refinance vs Home Equity Line of Credit

Cash-out refinances and home equity lines of credit are two borrowing options that allow homeowners to tap into the equity they have built in their home.

A HELOC is a line of credit secured by the borrower’s home. The line of credit can be accessed on an as-needed basis, up to the borrowing limit. The borrower is only charged interest and responsible for repaying the amount they actually borrowed.

For a cash-out refinance, the borrower takes out an entirely new mortgage while borrowing a portion of their existing home equity. The total borrowed amount of the cash-out refinance will be greater than the borrower’s original mortgage, and the borrower will receive the difference in a lump sum payment from the lender.

So while both allow borrowers to access the equity they’ve developed, a HELOC operates as a revolving line of credit that is secured by the borrower’s home, while a cash-out refinance offers a lump sum amount when the borrower refinances their home, resulting in an entirely new mortgage.

There are differences in how each type of loan works that may influence which is right for you. In general, HELOCs give borrowers flexibility since they can draw on the line of credit as needed and are suited for shorter-term financial needs. Cash-out refinances require the borrower to take out a new mortgage and the borrower generally needs to pay closing costs upfront. They often have a fixed interest rate and may be a better option for borrowers who have a long-term need.

Learn more about the pros and cons of a HELOC vs a cash-out refinance.

Difference in HELOCs and Cash-Out Refinancing

Home Equity Line of Credit (HELOC)

A HELOC is like a line of credit in that borrowers can draw from using their home as collateral. The amount of the line of credit is determined by the mortgage lender and is based on the amount of equity a homeowner has built. Lenders usually limit the line of credit to around 80% to 90% of the equity amount.

A unique feature of a HELOC is that it works somewhat like a credit card in that it is revolving. If a borrower, for example, is approved for a $30,000 home equity line of credit, they can access it when they want for the amount that they choose by writing a check or even using a specified credit card.

Many lenders, however, have a minimum draw requirement, which means a borrower has to take out a minimum amount even if it’s more than they need at the time. Also, lenders have the right to change the terms associated with the line of credit and can even close it, often without having to provide advanced notice.

A major drawback of a home equity line of credit is that the interest rate is usually adjustable. This means that the interest rate can rise, and if it does, the monthly payment can increase. Another point that borrowers should keep in mind is that there is a draw period of 5 to 10 years during which a borrower can access funds and a repayment period of 10 to 20 years.

During the draw period, the monthly payments can be relatively low because the borrower pays interest only, but during the repayment period, the payments can increase significantly because both principal and interest have to be paid.

Cash-Out Refinance

A cash-out refinance is a form of mortgage refinancing that allows a borrower the ability to refinance their current mortgage for more than what they currently owe in order to receive extra funds.

For example, if a borrower owns a home worth $200,000 and owes $100,000 on their mortgage at a high-interest rate, they could refinance at a lower interest rate, while at the same time taking out a larger mortgage. Let’s say they refinance the mortgage at $130,000. In this case, $100,000 would replace the old mortgage, and the borrower would receive the remaining amount of $30,000 in cash.

Borrowers should keep in mind that a cash-out refinance replaces their current mortgage and even though they receive additional cash they only have to make one monthly payment. Unlike a home equity line of credit, a cash-out refinance may have a fixed interest rate, meaning that the interest rate remains unchanged for the life of the loan so the monthly payments remain the same. Additionally, interest rates are typically lower than with a HELOC.

Recommended: Home Buyer’s Guide

The approval process for a cash-out refinance is similar to the initial approval process when buying a home. It can be somewhat cumbersome, but the payoff is a lower interest rate, a fixed payment, and access to additional cash.

HELOC vs Cash-Out Refinance

HELOC Cash-Out Refinance
Borrowing Limit 80% to 90% of borrower’s equity 80% of borrower’s equity
Interest Rate Generally variable May be fixed or variable
Type of Credit Revolving Credit

Borrowers receive a line of credit for a specified amount and draw period (5 to 10 years) followed by a repayment period (10 to 20 years).

Installment Loan

Borrowers receive a lump sum payment. The resulting mortgage has a new rate and repayment terms (generally 15 to 30 years).

Fees Several types of fees, depending on the loan terms, may be charged periodically such as an annual fee or inactivity fee for non-usage. Fees are generally paid upfront in the form of closing costs (typically 3% to 5% of the loan amount)
When might it make sense to borrow? HELOCs can be useful for shorter-term needs or situations where a borrower may want to access funds over a specified period of time Cash-out refinances may be useful if borrowers need a large sum of money that is often used to improve their financial situation on the whole (for example to pay off debt or to finance a large home improvement project).

Which is Better?

Like most things in the world of finance, the answer to which option is better will vary by person based on their individual financial circumstances and unique needs. In some situations, a HELOC may make more sense than a cash-out refinance and vice versa.

Because HELOCs generally have a variable interest, they can be useful for shorter-term needs or situations where a borrower may want access to funds over a certain period of time, for example when completing a home renovation.

Cash-out refinances can make sense if there is a need for a large sum of money or if they can be used as a tool to improve your financial situation on the whole.

Both a home equity line of credit and a cash-out refinance have fees associated with them. With a cash-out refinance, fees are paid upfront in the form of loan closing costs. With a HELOC, several types of fees can be charged periodically such as an annual fee or inactivity fee for non-usage. One way for a borrower to reduce these fees is to shop around and compare lenders.

While it’s typically faster to be approved for a home equity line of credit, the adjustable interest rate and lack of a fixed payment can potentially be a drawback. The approval process for a cash-out refinance is more complex than that of a HELOC, but the loan will have a set payment and a lower interest rate that can provide significant savings. Both options give borrowers the ability to turn their home equity into cash, which can make it possible to achieve certain goals, consolidate debt, and improve their overall financial situation.

The Takeaway

Both cash-out refinancing and HELOCs have their place in a borrower’s toolbox. In both cases, borrowers are borrowing against the equity they have built in their home, which comes with risks. In the case that a borrower is unable to make payments on their HELOC or cash-out refinance, the consequence could be selling the home or even losing the home to foreclosure.

HELOCs are a revolving line of credit that are generally used when a borrower has shorter-term financial needs. Borrowers are able to draw against the line of credit as needed however the interest rate is variable. Cash-out refinances are generally used for longer term needs and often have a fixed interest rate.

Home owners interested in tapping into their home equity may want to consider cash-out refinancing with SoFi.

Qualifying borrowers can secure competitive rates and mortgage loan officers are available to walk borrowers through the entire process.

Learn more about SoFi’s competitive cash-out refinancing options. Potential borrowers can find out if they pre-qualify in just a few minutes.


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Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Preapproved vs. Prequalified: What’s the Difference?

What does it mean to be prequalified or preapproved for a mortgage? The two words are often used interchangeably, but they aren’t the same thing and don’t carry the same weight when a hopeful homeowner is ready to buy.

Here’s a look at how these two steps vary, how each can play a significant part in any home buying strategy, and how one in particular can increase the chances of having a purchase offer accepted when there are multiple offers on a house.

Getting Prequalified for a Mortgage

Getting prequalified is a relatively quick and easy process.

You, the mortgage applicant, provide a few financial details to a lender. The lender uses this unverified information, usually along with a soft credit pull, to let you know approximately how much you may be able to borrow and at what terms.

Because prequalification is an estimate of what the lender thinks you can probably afford based on the data input, the lender may ask some clarifying questions around income, assets, employment, and debt. You likely won’t be asked to provide any documentation at this point, so it’s pretty painless.

Getting prequalified can give an applicant a general idea of loan programs and the amount they may be eligible for.

But because the information provided has not been verified, there’s no guarantee that the loan or amount will be approved.

That doesn’t make this step irrelevant, though. Prequalification can help you in a few ways.

•  It can give you an idea of how much house you can afford.

•  It can alert you to loan programs you may be eligible for.

•  It can tell you what your monthly payment might look like when you do get approved for a mortgage.

It might be tempting to blow through this step by providing incomplete or embellished financial information to lenders—or to skip the prequalification process entirely. But who wants to fall in love with a house they can’t potentially afford? And who wouldn’t want to weed out any mortgage programs or lenders that don’t suit their needs?

Mortgage LoanMortgage Loan

Getting Preapproved for a Mortgage

Once you decide on a mortgage lender or lenders, you can begin the preapproval process.

Preapproval typically takes longer than prequalification and requires a thorough investigation of your income sources, employment history, assets, credit history, and other financial commitments and debts.

Verification of this information, along with a hard credit pull from all three credit bureaus, allows the lender to complete a preapproval of the loan before you shop for an eligible property.

When seeking preapproval, besides filling out an application, you may be asked to submit the following to a lender for verification:

•  Social Security number or some other form of identification

•  Two most recent pay stubs

•  W-2 statements for the past two years

•  Tax returns from the past two years

•  Sixty days’ worth of documentation (or a quarterly statement) of the activity in checking, savings, and investment accounts

•  Residential addresses from the past two years, including contact information for rental companies or landlords, if applicable

The lender may require backup documentation for certain types of income in order to qualify for a mortgage. For example, rental property owners may be asked to show lease agreements. Freelancers may be asked to provide 1099 forms, bank statements, a profit and loss statement, a client list, or work contracts.

Buyers also can expect to have to explain negative information that might show up during a credit check. (To avoid any surprises, proactive buyers can get annual free credit reports from freeannualcreditreport.com. A credit report shows all balances, payments, and derogatory information but does not give credit scores. It may help potential borrowers identify and amend errors before applying for a loan.)

Those who have filed for bankruptcy in the past may have to show documentation that it has been discharged. Applicants face a waiting period, which varies with the lender and whether they are seeking a conventional vs. government home loan, after a bankruptcy dismissal or discharge and before being eligible for new loan approval.

The lender will need to verify the amount and source of the down payment you plan to provide. If your parents are kicking in some cash, for example, the lender will ask for a gift letter that confirms that the money is a gift and not a loan. Some loan programs may require you to contribute a certain amount of your own money (sometimes 5%) to the loan before a gift can be applied. Generally, investment properties are not eligible for gift funds.

Those taking a loan or withdrawal from a 401(k) also typically will have to show the paperwork. And any sudden changes in finances may have to be explained—so it’s important to have a paper trail.

Three Reasons to Get Preapproved

Sounds like a lot of work, right? But preapproval has at least three selling points:

1. Preapproval lets you know the specific amount you are qualified to borrow from the lender, instead of just an estimate. You can always purchase a house for less than the preapproved amount.

2. Going through preapproval before house hunting could take some stress out of the loan process by breaking up the borrower and property underwriting portions of the loan. Underwriting, the final say on mortgage approval or disapproval, comes after you’ve been preapproved, found a house you love and agreed on a price, and applied for the home loan.

3. Being preapproved for a loan helps to show sellers that you’re a vetted buyer. The lender can provide a preapproval letter that indicates the willingness to lend you a particular amount, and the interest rate and fees you can expect to pay on that loan (though it’s not a guarantee that you’ll get the loan).

Depending on the real estate market, sellers might receive offers from multiple buyers. Having a preapproval letter could improve the chances that your offer will be selected, especially if other offers lack a preapproval letter.

The letter tells the seller that your credit, income, and assets have been reviewed and approved by a lender to move forward and that if the property is eligible, the loan should close with no issues to derail the purchase.

Time Is of the Essence

A preapproval letter usually expires in 90 days because pay stubs, bank statements, and so on are considered dated after 90 days.

If the information needs to be updated and reverified after that point, the preapproval letter can be reissued with a new expiration date.

If you’re seeking loan preapproval, you may benefit from mortgage rate shopping within a focused period—generally 14 to 45 days, varying by the credit score model each lender uses—to avoid dragging down your credit score.

If you apply for mortgages with several lenders within the condensed time frame, and each makes a hard pull of your credit, it will count as just one hard inquiry.

Finalizing the Mortgage Application

After you find the house you want to purchase and the seller has accepted the offer, the next step is to finalize your mortgage application and move toward final loan approval.

You don’t have to choose a mortgage from the same place a preapproval letter came from.

Once the lender receives the property appraisal and title report, a loan underwriter reviews the data and issues a loan commitment letter or final approval. This means that the loan has been fully approved and a closing date can be scheduled.

The lender may perform another credit check right before a loan closes. Applying for any new credit cards or auto loans, or making large credit purchases during the home buying process could affect final mortgage approval.

Some borrowers choose to lock in the interest rate offered by the lender once they find a home they want to buy. This freezes the mortgage rate for a predetermined period.

It’s a good idea to verify the time period to make sure the rate is in effect through the escrow closing date, and to review the fully executed purchase contract with the lender for closing and loan contingency timelines to be sure contract dates can be met.

Finally, even if you pass the loan approval process with flying colors, the home being purchased might not. The lender will likely order an appraisal to be sure the selling price is accurate and that the property type (single-family home, farm, etc.) and condition are eligible for home loan financing.

If the sales price is higher than the appraised value, you may have to go back to the negotiating table, walk away from the deal, or come up with cash to make up the difference.

What If My Preapproval Didn’t Pan Out?

Being turned down for a mortgage—or not being able to borrow as much as expected—can be disappointing. But it doesn’t have to put a stop to home buying hopes.

If you are in that boat, you might want to try to understand why you were not eligible.
You could:

•  Consider another loan product or lender where you might meet the lending criteria.

•  Work on improving whatever put a damper on your home loan qualification.

•  Find a home that’s better suited to your budget if you were preapproved for a lower loan amount than expected.

The Takeaway

Preapproval vs. prequalification: If you’re serious about buying a house, do you know the difference? Getting prequalified and then preapproved may increase the odds that your house hunt will lead to homeownership.

SoFi offers a range of fixed-rate mortgage loans with competitive rates and low down payment options.

Looking at investment properties? SoFi has loans for those, too.

It’s a snap to get prequalified and view your rate.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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Common Financial Mistakes First-Time Parents Make

As a first-time parent, there’s a lot on your plate. You’re responsible for raising a tiny human into a smart, kind, and successful member of society. Mistakes, even when it comes to money matters, are inevitable.

Still, thoughtful planning can help you meet your financial goals and give your kids the support they need.

And they will need all kinds of support: Consider that the cost of raising a child born in 2015 to a middle-income couple until the age of 17 is nearly $285,000, with projected inflation costs factored in, data from a federal survey shows. And that doesn’t include college. (Not surprisingly, the higher a family’s income, the more is spent on a child.)

To make sure you’re starting off on the right foot, here are common money mistakes first-time parents make and how you can try to avoid them.

1. Overspending on Baby Gear

As a first-time parent, you likely have quite a bit of work to do before the baby arrives. You may need to create and furnish a nursery for your child, and stock up on diapers, bottles, clothes, toys, and so much more.

As you’re setting up your new life with a baby, it can feel like buying everything brand-new is the only option, but that can be costly. You might consider taking advantage of used or gifted items.

You can buy a lot of items secondhand at a lower cost through online marketplaces or at brick-and-mortar used-goods and consignment stores.

And if you have friends, family, or neighbors that already have children, they may be looking to unload some of the gear their children no longer use. Things like cribs, playpens, toys, books, and clothes are all great for passing down.

2. Living Without a Safety Net

As a new parent, you’re about to incur all sorts of costs you may have never thought of.

Now that you have a child or one is due, having an emergency fund is even more important. You’re now responsible for all of their needs, and there may be unplanned costs that pop up along the way.

Saving for an emergency is a process, and it’s okay to start small—even just $25 a week will add up over time. Some people opt to store their emergency fund in a savings or checking account, or a digital cash management account.

3. Avoiding a Budget

Before you had children, maybe you cooked the majority of your meals at home, did all of the house cleaning weekly, prepped meals, and meticulously shopped for groceries to stay on budget.

The first few months with a newborn can be a blur, complete with sleep-deprived nights and exhaustion. You may not have as much time to cook and clean, or keep up with the other activities you were handling before the birth of your child.

You could hire a housekeeper, get take-out meals, enroll in a subscription meal-delivery service, or have your groceries delivered every week—but all of those conveniences come at an added cost, obviously.

A new monthly budget can help prepare you for the extra expenses.

As your child grows, there can be more and more new costs. Maybe they need braces or want to participate in a sport, art classes, dance lessons, or music lessons. Thinking about these costs now may make planning for them easier.

4. Putting Off Saving for Retirement

Another financial mistake some new parents make is failing to save for retirement.

Learning to pay yourself first isn’t easy for a lot of parents to do, but you could consider prioritizing retirement while helping your child as much as possible and educating the child on smart practices for student loan borrowing.

For retirement saving, one way to start is by enrolling in your company’s 401(k) plan if one is offered. Some employers will match your contribution, up to a certain percentage, and you’ll be able to have your contribution taken directly from your paycheck. If your employer doesn’t offer a 401(k), you could open an IRA instead.

It’s never too early to start saving for retirement.

5. Not Saving for College

As mentioned, you may not want to focus solely on saving for your children’s tuition and let retirement planning fall by the wayside. But that doesn’t necessarily mean you can’t try to save for both.

While a standard savings account may seem like the easy choice, there are other options available that are designed to help you or grandparents save for a child’s education.

One is a 529 college savings plan . There are two types: education savings plans and prepaid tuition plans.

With an education savings plan, an investment account is used to save for the child’s future qualified higher education expenses, like tuition, fees, room and board, computers, and textbooks. Earnings used for qualified expenses are not subject to federal income tax or, in many cases, state income tax.

With a prepaid tuition plan, an account holder purchases units or credits at participating colleges and universities for future tuition and fees at current prices for the beneficiary. Most of the plans have residency requirements for the saver and/or beneficiary.

A Coverdell education savings account may also be worth looking into. In general, the beneficiary can receive tax-free distributions to pay for qualified education expenses.

Contributions to a Coverdell account are limited to $2,000 per year. The IRS sets no specific limits for 529s.

6. Missing Out on Tax Breaks

When you have a child, you may be eligible for certain tax benefits. It might be worth reading up on the Child and Dependent Care Credit, the Child Tax Credit, and, for lower-income parents, the Earned Income Tax Credit.

There’s also an adoption tax credit, which offers tax incentives to cover the cost incurred if you adopted a child.
Consult a tax professional to see if you qualify.

7. Not Teaching Your Kids About Money

If kids aren’t taught the basics of financial literacy at a young age, they may struggle to balance a checkbook, make a budget, or save money when they’re older. Helping your children learn what it means to manage money by teaching them to save and spend their earnings can help set them up for financial success in the future.

You may want to introduce your children to money at a young age—kids love to play store, and by exchanging goods for money, they’re already beginning to understand the basic principles of commerce.

As they get older, you may want to try giving them an allowance in exchange for chores or homework completion.
You could even have them make a budget with their earnings, and encourage them to spend, save, and donate.

The Takeaway

New parents are often too overwhelmed to think a whole lot about managing money, but trying to avoid common financial mistakes could help the whole family, at first and much later.

If you’re a first-time parent and aren’t sure how to plan your finances, a money-tracking app could help. SoFi Relay tracks all of your money, all in one place—at no cost—and provides credit score updates.

Stay on target to reach your goals. Start tracking your money with SoFi Relay.


SoFi’s Relay tool offers users the ability to connect both in-house accounts and external accounts using Plaid, Inc’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
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SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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