Documentation and credit investigation

You want to buy a new house and you need to take out a loan in order to pay for it. Once you have chosen where to apply for a loan but before you actually file the application, there are things you need to take care of to minimize the chances of getting your loan application disapproved.

Make sure that your documentation is complete and accurate

Different lending institutions have different requirements but here is a checklist of documents that are always required:

  1. A valid ID which may be your passport, driver’s license, social security card, postal ID or employee ID;
  2. Income tax return for the current and previous years;
  3. Certification of employment stating the length of service and monthly income;
  4. For self-employed individuals, copy of business registration and audited financial statements;
  5. Bank statements including your passbook and time deposits;
  6. Other proof of income such as lease contracts if you are a landlord;
  7. List of owned properties including real estate and shares of stock.

Check your credit standing Securing a loan to purchase a house and lotWhen you apply for a loan, rest assured that the lending company, whether a bank or some other institution, will conduct a thorough investigation of your financial background. A lender wants to make sure that not only do you have sufficient income to pay for the loan but that you are not so deep in debt that your income will not suffice to meet all your financial obligations. Your attitude towards financial liabilities count too. If you’re delinquent with your payment of credit card bills, telephone bills or other bills that should normally be paid on a regular basis, that delinquency will reflect on your credit standing.

So, even before you file the application, tie up any loose ends. If there are disputes over any billing statement, settle them first. If there are unpaid bills, make the payments up to date.

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