People apply for loans for a wide variety of reasons, and the results of those applications can often change lives. But before you submit that paperwork to the loan officer, you need to be aware of the most common mistakes people make that often cost them a chance at getting approved for their loan. The loan process can be difficult, but you can make it easier by avoiding the more persistent errors others make.
Trying to get Other Credit at the Same Time
U.S. NEWS AND WORLD REPORT reminds us that clearing up your credit reports by confirming that the information is correct is a good idea before applying for a loan. It is also a good idea to take the necessary steps to improve your credit score, such as paying your bills on time. But you can ruin all of that good work if you try to apply for a credit card or car loan at the same time that you are applying for a mortgage. Too many credit inquiries in a short period of time can ruin your chances of getting any loan that you want.
Not Shopping Around
According to THE PENNY SAVER BLOG, you should use the same approach to finding a good loan that you would use to find the right car insurance. You should get several offers you can compare side by side to see which one best fits your needs. One of the biggest mistakes people make with loans is that they assume that every bank offers the same terms, and that prevents people from missing out on some great borrowing deals.
Not Reading the Fine Print
When consumers are presented with a loan they really want, they will often sign the agreement instead of reading the fine print. But after they have signed the agreement, they find out that the fine print adds money to the monthly payments and increases the overall cost of the loan. You should never sign a loan agreement you do not read and understand first. If you do not understand the paperwork, then hire an attorney to translate the terms for you.
Not Asking Enough Questions
Do you know how much lower your monthly payments will be if you give more of a down payment? Did you ask the loan agent if the interest rate you have been given is negotiable? The only way you can find out what types of deals you can get with your loan is to ask questions. The worst that a loan officer can do is reject your request, but you may wind up with a better deal when it is over.
Choosing Variable Interest Rates
It is a much better idea to negotiate a low fixed interest rate, than it is to settle for a fluctuating variable rate. When you have a fixed interest rate, your payments will not change for the life of your loan. A variable rate loan could raise your payments each year until you are suddenly faced with payments you cannot afford.
COMMITTING TO A LOAN IS A BIG FINANCIAL RESPONSIBILITY, which is why you need to make sure that you are taking care of every detail before you sign the paperwork. By looking out for your on best interests, you can save money on your loan and still get the funding that you need.