If you're reading this, I'm earning money. Thanks for helping to feed my family. Please see our disclosure for more information. Also, any advice provided is for informational purposes only. I'm not a CPA, lawyer, or doctor, although my parents wanted me to be all three. So, talk to a professional before acting on anything you read below.
Have you ever applied for a bank loan or a car mortgage? Can you remember the number of documents that you were required to present? Applying for a loan or mortgage can be intimidating. The lenders are going to ask you a lot of questions. They would want to know your whole financial profile before approving your loan and setting an interest rate. That's why when you finally get that approval stamp, you feel a rush of relief washing over you.
It shouldn't be that nerve-wracking if you know what to expect. Lenders are going to call credit monitoring companies to get your credit score and history. That's the first thing all banks and financial institutions would do. They'd want your complete financial profile to gauge your intent and ability to repay the loan. So what other things should you expect the lenders to ask?
If you are applying for a long-term loan such as a house mortgage, it makes sense that the bank would want to know how long you've been staying with your current employer. Most lenders will want you to have been there for two or more years. They will be interested in your job situation. Is it a stable job or company? Have you been promoted in the past year or so? How long do you intend to stay with your current employer? Changing jobs frequently will not work to your advantage.
The lenders have to be sure that you can pay the monthly amortization. That's why they need to know how much you make in a month. They'll look at your monthly expenses and measure your ability to pay off your bills and the loan repayment. They'll require to see your pay stubs, tax statements, and W-2s. If you don't have a steady income, you'll have to present more evidence that you can make the repayments.
Having a debt is not such a bad thing. That's to be expected from anyone. The lenders are looking for the kinds of debts that will prevent you from paying the money that you have borrowed. They'll take a look at your credit card debts, student loans, alimony, car loans, and other mortgages. Making a sizable purchase such as a car before applying for a loan will make lenders wary of approving your application. Since you already have to pay for such a huge purchase, how would you repay another loan?
You also have to show the lenders if you have money saved in the bank. They'd want you to have a total of two mortgage payments there. They know that there will be incidents in the future that will prevent you from making the repayments. But if you have savings, then that tells them that you are prepared for those kinds of situations.
Applying for a loan shouldn't be an overwhelming experience. It should be easy and uncomplicated if you know what to expect. Read up as much as you can about mortgages and loans before going to an agent or bank and applying for one.
Financial Lessons the COVID-19 Pandemic Taught Us
Teaching Your Kids How to Budget? Here’s How to Make It Fun
4 Smart Saving Tips You Need To Know Now
Can You Retire in a Crisis?
How To Pay for a Health Care Emergency After Losing Your Job
Why is the Euro Stronger Than the US Dollar?
How To Make Money: 2020 Guide
5 Ways in Which Parents Could Lessen the Financial Burden of College
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.