Step-by-Step Guide on How to Get Pre-Approved for a Loan
The process of getting a loan can be as simple or as complicated as you make it to be. If you prepare in advance, you can get pre-approved and this turns your life so much easier: you can organize your budget, put yourself in a position to negotiate better, and understand the costs of your loan, which stops you from obtaining something you cannot afford. So what does it take to get pre-approved for a loan? Follow the steps below, prepare everything ahead of time, and get the funding that you need right now.
- Ensure your credit is in a good shape.
Your borrowing history is crucial to get approved for a loan so evaluate its shape so that it is presentable to potential lenders. Plus, it never hurts to learn more about your credit. Take the time to understand how it works, what lenders are looking for, and how credit scores work. Speaking of scores, check your reports and see what they contain. By law, you are entitled to one free credit report per year. Use this well to assess your credit and look for any errors or reports of late payments. In case of errors, do not take anything lightly and report it quickly to the credit bureau. Some mistakes have severe consequences!
- Evaluate your finances and ability to pay.
Gather all information and documents pertaining to your income in advance. Lenders will ask for it and being prepared increases the turnaround time of your application. See to it that all information about income and assets are up-to-date and that your files clearly show you have sufficient income to make repayments on the new loan. Documents to support your claim include current pay stubs, recent tax returns, and bank account statements. Details about the property you are buying can also help the lender make the right decision.
- Shop around for quality lenders.
If you get pre-approved by one lender, you can use this pre-approval letter as a leverage when shopping around. Always compare costs to find the best terms and get quotes from different types of lenders.
After all the preparation, it is time to apply for a loan to your chosen lender. Submit all your paperwork on time and wait for an answer. Turnaround varies from a day to several days depending on the provider. In general, it is best to get a loan only from reputable lenders in your community and legitimate online lenders. Do your research and your pre-approval will certainly work hard for you in securing the loan that you need.