Getting a yes for your bank loan application is not a walk in the park. With the recent downturn in the country’s economy, lenders have become stricter in their evaluation of loan applications, including personal loans and home mortgages.
Therefore, you need to convince your prospective lender that you are not a high-risk borrower. Fortunately, you can improve your chances of getting a favorable mortgage loan application. Here are some useful tips:
Present an improved credit history
Having several credit cards may be convenient. The problem is it can cause serious problems if you do not manage your borrowing well. Missed or late payments will reflect on your credit history, and American Bank & Trust and other lenders will see the negative entries in your payment record. This is bad if you have a pending loan application.
Make sure you submit complete and thorough documentation
A lot of loan rejections happen due to insufficient documentation. Check the requirements and ask for clarifications, if necessary. Make sure you have all the required documents ready before submitting. Common documentary requirements include proof of billing address, photo ID (e.g., driver’s license), proof of employment (e.g., company ID, pay slip), and latest income tax returns.
Check your debt-to-income ratio
Banks take a close look at your debt-to-income ratio when evaluating your mortgage application. As the phrase suggests, it compares your total debt against your income. You can expect to get unfavorable results if your total borrowing is more than 40% of what you earn. So pay off some of your debts first before applying for a loan. It is also important not to borrow an amount larger than your actual needs.
Follow the tips provided in this post. Doing the necessary preparations before applying for a loan can help improve your chances of approval.