Getting Approved for a Loan – Preparation is the Key
Assume you are going to sit for your college entrance exams.
Obviously, getting the best score possible on them is crucial. You want
to go the best possible institution of higher learning. Given this fact,
are you just going to waltz in and take the exam or are you going to
prepare yourself as much as possible? Unless you are Stephan Hawking,
you are probably going to put a lot of time and effort into preparing
yourself for the big test.
Applying for a home loan approval is a test of sorts. A lender is
evaluating a number of factors to see if you “pass” the basic
requirements for approval. These factors can include everything from
your employment history to credit score. Buying a house is an important
moment in your life. Are you going to apply for the lender test without
preparing for it? You are taking a huge risk if you do. Just like
college entrance exams, preparing for your home loan application will
help you get approved with the best rates.
The first thing you should do before applying for your loan approval
is order your credit report from the credit agencies. The big three are
Equifax, Trans Union and Experian. Given their important role, you might
be surprised to find out they offer incredibly poor service. It is
estimated that up to 50 percent of all credit reports may contain
incorrect information. The agencies cannot even get their act together
on basic things. For instance, they were fined a total of 2.5 million
dollars in 2000 for failing to provide phone numbers where the public
could reach them.
Once you get the credit reports, read them closely. You will probably
find all types of listings that are not yours. Challenge these
immediately per the information provided on the reports. Your credit
score is a significant part of the evaluation process for your
application. Upgrading your credit by challenging errors can move your
credit score enough to get you better interest rates and save you tens
of thousands of dollars.
Beyond your credit score, you should look at your overall assets.
Make sure you identify where all of your assets are [stocks, bank
accounts, mutual funds, etc.] and get documentation to support the fact
they exist and for how much. Also, get copies of all your tax returns,
state and federal, for the last two years. If you are self-employed, you
should also gather all tax returns for any business entity you work
under.
When you make the decision to apply for a home loan, don’t just run
out and apply. Take the time to get your credit report in good shape and
get together the documentation you will need. Once you are prepared, go
take the test.
