- Why Your Loan Application Can Be Denied
Why Your Loan Application Can Be Denied
Every day, millions of people around the world apply for a mortgage loan or want to apply and yet have no idea what they are applying for. This may sound sad, but the fact is, millions of people are pretty clueless about how to apply for a loan. They think that if they want to buy something, all they need to do is fill out a form and submit it to a lending company. Then they get frustrated and angry when their applications are denied.
If you are one of these clueless types, you should take a breather and learn a few basics.
- You need to fill out not just the loan application form, but you have to submit numerous requirements like your income statement, your tax receipts, affidavit of employment, a bank statement or two, identification papers, statement of assets and liabilities and others that individual companies may request for.
- If you have existing loans, the documents regarding these loans would also have to be submitted. However, some people think that by not submitting the lending company will not find out. Wrong, these companies have credit investigators and if they see that you have massive debts, they will think twice about approving your loan.
- Once all documents are submitted and the credit investigation completed, the lending company will now look at your capacity to pay. It may all look good on paper, but once they re-examine from another angle, they may discover that even if you don’t have massive debts, the amount you are applying for may be too much for you to pay every month. They may either deny your application or award you with a much lower amount.
- If you are applying for a home mortgage, then the lending company will demand the papers that support the property and also assess the condition of the home. If they are satisfied they will approve, if they do not, again they can either deny or grant a lower amount.
Remember, the lending company agrees to invest on you if they grant you a loan mortgage. This means they entrust their money into your care. If you fall short of any factors that lead to approval, then, they will deny your loan.