Qualifying For A Loan
The definition of a loan is general knowledge to everyone but did you know that there
are different types of loans that you can get depending on your need? A loan is where someone borrows money from someone else who can lend the correct amount to them.
Appropriately, the terms used to describe these people are the borrower and the lender. The amount borrowed is called the principal and must eventually be paid back to the lender.
Usually you have regular repayments set up where you pay so much money on the principal and interest each month. The lender is willing to give out money because over time, it becomes an investment for them.
They come up with a certain interest percentage and end up making more money than they lent out over time. It may take thirty years to be fully repaid, but by then they could end up making an extra twenty percent of the loan back.
The cost of the getting it is the interest. Usually you get them through banks but to do this, you have to become qualified.
There are many different things that they look at when determining if you will qualify or not. The first thing you have to do is to fill out an application with either a bank, credit union, financial service, or a building society.
They will need to collect the necessary data including; what is the loan for, their previous credit history, the amount of money they make, any jobs they have, any other types of loans they already have out, all the dependents and other financial obligations they have, and a background check on the applicant. This may seem like a lot of information but all of it is necessary.
In the past, many dishonest people have gotten away with not repaying their debt back. They move, change their name, and basically steal the money so they do not have to pay it back.
If you were the lender, what kinds of things would you need to know about this person before you gave them two hundred thousand dollars to buy a house? You would want to know their credit history which tells you if they are good about making payments on time and being consistent with how much they pay.
Knowing if they have any other debts and how much money they make is very important as well. This will tell you if they will have enough money every month to make their payment to you and if they can make it on time.
You do not want to lend money to someone who cannot pay it back because then you lose all that money. Instead of making more on your investment, you lose it all and then some.
When taking a mortgage out on a home, there is usually a pretty stable percentage on the interest that everyone else pays. Depending on the area in which you live, this number may be smaller or larger.
Also depending on your credit history, you may qualify for a smaller percentage. The last thing that can bring your interest down depends on how much you paid up front on the principal and how much your property is worth.
For example, if you are buying a home that is two hundred thousand dollars and you put down twenty percent at the beginning, then your monthly payments will be less. But if you can only afford to put down five percent at the beginning, then your monthly payments will be a little bit more.
That is why it is wise to save as much money as you can before buying a house. You do not ever want to take out a mortgage without putting any money down at the beginning because you will end up paying a lot more in monthly payments in interest than you originally would have had to do.
Keep your credit score high by paying off your bills every month and do it on time. There will come a day where you will want to buy some property and you want to be able to qualify for the loan so that you can get that house.
by: Tom Selwick
Changing Faces of Mortgage Qualification Guidelines Loans Offered By Mortgage Lenders Payday Loans Lender - Choosing the right lender The National Theatre - South Bank, London Unsecured Loans Are The Best For You- So Stop Looking Around I Do Not Have a Debit Card - Can I Get a Payday Loan? I Need Money in a Hurry - The Payday Loan Solution How Does Loan Modification Foreclosure Prevention Work? Loan Modification Standards Changing the Mortgage Lenders The Role of the Guarantor Loan Broker Bank Declined? Guarantor Loans Might Be the Answer The Fannie Mae Loan Modification