There are many different kinds of loans, such as loans for students, refinancing, home loans, etc. In the case of a student loan, the student must provide a student aid report, complete an entrance counselling session, and sign a consent form before they can apply for a loan. If a student wants to go to college or apply for a loan, he or she needs to have gone through the entrance counselling.
When applying for a home loan or other type of loan, the borrower must have the following documents in hand. Here's what they are: a. Credit authorization reports, which mean that the borrower must have a good credit score. b. Should have turned in tax returns and kept copies. c. If the person has a rental property, they must show the rental agreement. d. A person can show his bank statements when applying for a loan to speed up the process. e. If the borrower wants to refinance, he or she needs to say what they plan to do with the money. f. If the borrower is divorced, the divorce decree must be shown so that the borrower's financial responsibility is clear. g. If the borrower is not a U.S. citizen, he or she must show proof of a green card. All of this information helps the organisation or lender decide if the borrower is trustworthy and if he will be able to pay back the loan on time, and if not, what security can be used to get the money back.
When applying for a loan, the forms ask for information like the amount borrowed, how long it will take to pay back, if there is payment protection and insurance, if it is a single or joint loan application, the current value of the property, the amount still owed on the mortgage, the monthly mortgage payment, and the annual salary of the household. These questions also tell the lender more about the borrower and whether or not he is a good credit risk.
Banks and other financial institutions follow these rules to the letter. However, if one or more of the requirements aren't met, the institutions won't lend. This is where private lenders and brokers come in. They offer loans from different places at a higher interest rate and with a house or property as security. These private lenders and brokers take a risk, but they make up for it by charging a higher fee.
