Loan Approval Process
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Introduction
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Getting a loan approved can be a tedious, stressful process. But being prepared can make it go smoother and increase the chances of your loan being approved.
Preparation
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To obtain a loan, you must be able to show the lender that you are creditworthy. Before meeting with a lender, you should gather all your income paperwork, such as pay stubs and W-2 forms, along with any bank or brokerage statements. You'll also need statements for any credit cards, existing home loans, vehicles loans or other types of debt you have. Your lender will provide a list of required documents.
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Meeting With the Lender
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Once you have the necessary information, you will meet with the lender, who will ask you to fill out the application paperwork and may ask additional questions. You should answer these questions truthfully, because falsifying information on your loan application can result in criminal charges.
Waiting for a Decision
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The lending institution will evaluate your documents for such factors as your debt-to-income ratio and check your credit score to determine if you are a credit risk. While you may have been told that you are "pre-qualified" based on your initial application, that doesn't mean you'll always get the loan.
Approval or Rejection
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Once the lender completes its review of the application, it will make a decision. If the loan is approved for the amount requested, there will be some additional paperwork required to finalize the loan before the process is complete. The lender also may approve a loan for a lesser amount than you requested or decline to make a loan.
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