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Loan Application

Loan Application

Loan application is a crucial beginning of a loan. After you come to a conclusion that you are in need of finance from a genuine financer, then you should start applying for a loan. The most important are to know the financers whereabouts, rate of interest, payment system, repayment mode, terms and conditions.

Information need to provide for Loan application:

A banker must need the information about provide credit, income, asset, and liability information, including your income, residence, and personal identification. You can save time and expedite your application by collecting all before you begin the process.

Personal information

You have to provide the Employment and salary history for the past two/three years. The addresses of your residences for the past two years along with evidences are very much importance for your Loan application. You and associated members• social security number are necessary as a proof of residence and citizen of the country.

Financial Information

You have to provide your current source of income - this includes your base salary, any commissions or bonuses, dividends, etc. You should prepare a balance sheet for your income and expenditures in fiscal year. The detail of your current or saving account numbers and locations of your bank accounts should be provided correctly for bankers• enquiry. Besides Bank, you have to give the detail of your investment: account numbers, balances, and names of the institutions holding them etc.

If you are a self-employed or compensated by commissions, in this case, you need to supply your federal tax returns for the most recent year you filed and the year preceding that one or two years.

There are a few questionnaires make you easy to analysis of loan regarding:

1. How much are you supposed to pay upfront

In some cases you will not be paid the entire amount what you applied for. It may be around

80% to 90% of the cost of the home or vehicle you are going to buy. This is applicable even for education loan. The margin amount/ fund you have to contribute around 10% to 20 %.

2. How much EMI and when is your pay-day

According to your payment capacity in a regular basis, the Equated Monthly Installment (EMI) is the amount of money is fixed. You have to see whether you are able to regularize or not towards repaying your loan. The EMI is a combination of interest rate payment and principal repayment.

Once your EMI date is fixed, that will be mandatory date for you for repayment. It may be as your post dated cheques, Electronics transfer from your account, but the date cannot be missed by you. Else they will charge a penalty against default. So this is a matter of thought.

3. Does it benefit tax

Only the home loan and education loan etc come in this scheme. The best tax benefit loan is home loan. If you are in need of a house and your tax deduction is high you have the best option to go for a home loan. The amount you pay as EMI will be calculated your tax calculation and it will balance your fiscal income balance sheet.

4. Do you have to pay prepayment penalty

You should check out whether any hidden charges for late payment, processing, annual fees, member fees etc. Sometimes, you are charged if you repay the entire balance principal before the tenure ends. This time you have to check the benefits for your as rate of interest and the amount already paid as loan repayment.

5. How much the rate of interest is applied for your•

This is a comparative study before you apply for a loan. Check about the compound interest or flat rate of interest supposed to be applied for your loan. Check the same condition in other banks and be confirmed the cause of the way it is computed.

Documents Required:

There are few documents are mandatory for the loan processing. You have to use an attorney, escrow company, or title insurance company.

Loan Application / document Checklist:

The check list of documents includes:

1. Verification of income

• Earnings statements that are recent pay stubs and tax returns for the past two years.

• For self-employed: profit and loss statements and tax returns for current year and previous two years;

• Extra income: social security, overtime bonus, commission, interest income, veteran's benefits and so on.

2. Verification of your assets

• Bank account numbers

• Address of your bank branch

• Checking and savings account statements for the previous 2-3 months

• Savings bonds, stocks or investments and their approximate market values;

• Copies of titles to any motor vehicles that are paid in full.

3. Information about the purchase

• Copy of the purchase contract from the vender / dealer / house builder

• Show the deposited receipt that you have decided for buying the house

4. Your debts

• Show Credit card bills for the past few billing periods

• Other debt such as car loans, student loans, furniture loans and other personal and cosigned installment loans

• Evidence documents of mortgage and/or rental payments

• Copies of child support

By any chance if you dont have any established credit history and have any canceled checks or obligations, show as payment history and amount of revolving debt. Better if you can show the resource of your down payment for the loan. If you have gifted money to any relative then bring the copy of gift letter and copy of gift check to show your expenditure. The gift letter should state that the money will not have to be repaid from the relative. Different lenders may have slightly different information requirements, so better you ask your lender what to submit along with Loan application.

The application formats are slightly different for different purpose of loan also. There are different items and parameter for personal loan, Car loan, home loan, student loan etc. The basic information to be written is same such as identification, finance history, liabilities, amount, evidences etc.

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