Getting A Loan – Lets Understand The Process

Loans and mortgages are of great help in times of financial emergency. Many a times, such situation arises when we have no other option out but to take out loans to meet the necessity of funds. The loan funds can be used to meet various needs like buying a home or car, fund medical emergencies, pay for the education of the kids, go on a vacation, home improvements, car repair, etc. However, in order to make sure that you get a loan or a mortgage easily, you need to know the loan process. This will help you in taking the right steps to apply and get the loan funds.

Understanding the loan process

In order to understand the loan process, you will have to know the steps involved in getting a quick loan. Let’s take a look at them:

  • Shop around for loans: This is one of the most important steps in the loan process. Unless you shop around for your loan, you will not be able to know what type of rates and terms are available in the market at present. If you know the rates and terms, you will be able to bargain well with your lender. You should go for a lender who will be able to offer you the best possible rates and terms depending upon your income and credit.
  • Check your loan affordability: It is very important to know whether or not you will be able to afford the loan. The online affordability calculators will help you in checking your affordability. All you need to do is to put the required details in the calculator and hit on submit. It’s better to avoid a loan at  which you will not be able to afford.
  • Take a look at your credit: One of the major factors which is considered by the lender while giving you a loan is your credit. So, you should make sure that you have a good credit. Your scores should be excellent and you should try to remove any negative item mentioned in your credit report.
  • Pre-approval and pre-qualify: Before you look out for properties, you should get pre-approved and pre-qualified by some lender. Once you have the pre-approval letter in hand, it will be easier for you to look out for homes as you will have an idea about the amount of loan you will be able to get. Moreover, the seller will also be assured of the fact that you are interested to buy the property.
  • Get a GFE and submit all the documents: Once you zero down on a house, you should apply for a loan formally and get a GFE. This will let you know what types of fees and costs you will have to pay. You also need to provide the lender with all the required documents like W2 statements, tax statements, income and asset proof, etc. If all the documents are correct, then you will get a loan closing date.
  • Close the loan: This step is very important in case you are looking for a mortgage. For other personal loans, the money gets directly deposited in your bank account. At the closing, the underwriter will check the documents and give a final approval to the loan after which the funds will be disbursed.

Hope now you understand the loan process.

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