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Buy a House

Getting Your First Loan? 5 Things to Know about the Loan Application Process

loanArming yourself with knowledge when applying for a loan for a home, car, electronics or other goods can save you money, time and confusion. Here are the five things you need to know about the loan application process to help you get the financing you want.

Provide Pertinent Information

Typically, every loan application will require pertinent information. This is the starting point for the lender to begin the process of verifying your status, and pull credit scores and credit reports. It is imperative to be as accurate and complete as possible when filling out this section. The information you will need to provide will include:

• Full legal name

• Social Security number

• Date of birth

• Residence history – at least two years worth

• Employment history

• Current income from all sources

• Asset information including checking and savings account balances

Provide liability Information

The financial lender will want to understand all aspects of your liability month-to-month. You will need to list your current mortgage or rental payment information, along with details of all outstanding debt. This could include the amount you owe for vehicles, student loans, credit card bills, spousal and child support, and debt on any other real estate you own.

Your credit rating

Every lender will determine your credit worthiness by the score found on your credit report. Your credit rating is often referred to as a FICO (Fair Isaac Corporation) score. It is the standard scoring system used by moneylenders to determine whether to loan you money to purchase a home, car, or anything. If your credit rating has been bruised by late payments or non-payments, a low score can easily translate into significantly higher borrowing costs and interest rates.

The Cost of Money

Borrowing money involves fees, interest rates and other charges, which makes the amount of money you will pay back much higher than the total of what you borrowed. When shopping around for the best loan, you will need to know the prevailing interest rate offered by various lenders. If you are a veteran, you can find very low VA rates from various lenders, and the best place to look is the internet—places like LowVARates.com can help you find a deal to match your personal circumstances. Your loan application might be for an adjustable rate loan, where the rate can fluctuate with current market conditions, or a fixed rate where the payments never adjust.

Loan Origination Terms

Finally, the loan application will list all the details involving the terms of the loan origination. While you will not be filling out any of this information, it is imperative to read it carefully to understand every condition of the loan. Even if you don’t know very much about loans, you want to be clear on the terms. If you need to have someone explain it to you, don’t be afraid to ask a professional, or try and do some of your own research so you aren’t confused on what is expected from each party.

If you are preparing for your first loan, don’t be intimidated by financial jargon, fancy finance experts—those people are there to help you. Take advantage of all the information on the internet, as well as the information available from actual lenders in your area. The best thing you can do when getting your first loan is to first, do your homework, and second, ask questions. That way, you are sure to be clear on what is expected of you and what you are signing up for.

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