imageHow to Get a Home Equity Loan Approval

How to Get a Home Equity Loan Approval

19Feb 2010

Most people dream of owning a house for their family. If you are one of them, you are mostly in the market for a home equity loan. However, banks and lenders don't easily hand out such loans. They would scrutinize each borrower first before approving any loan. To increase your chances of loan approval, you should know what most lenders look at.   Ability to Pay and Collateral   The first thing any lender would be concerned of is whether you will be able to repay the loan. They would most likely check your income and compute your debt to income ratio. Higher income is a good sign but a lower debt to income ratio is also important. Aside from debt, your monthly expenses and deductibles are also factored in to see how much disposable income is left for the monthly amortization.   Then as security measure lenders would ask for collateral. It would also help if you had other assets besides your collateral. This way they can go after your assets should you go on default and end up unable to repay the loan. If you want to increase your chances of loan approval, you should list down as many or all assets in your loan application.   Credit History and Character Check   Your credit history would indicate if you are a good borrower. If you have several late payments, that would go against you for sure. Your expenditure every month would be checked through your credit cards and your utility bills as well. So if you are planning to take a loan, you should not make big purchases a few months before the application. And you should be on time in paying your bills always too.  

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