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Oscar Dominguez: A few helpful strategies for getting a loan

Union Bank

Posted: September 11, 2009 8:59 p.m.
Updated: September 11, 2009 4:55 a.m.
 
Whether you're seeking a mortgage loan or a personal loan to help pay down consumer debt in these challenging times, knowing the fundamentals needed to secure financing can help increase your viability as a loan candidate.

Ideally, before seeking a loan, it is wise to establish a credit and payment history.

Many lenders examine credit risk by reviewing your FICO® score, a credit score based on a mathematical formula developed by Fair Isaac and Company. Consider reviewing your credit report annually and promptly rectifying any errors.

In addition to establishing a solid credit history, consider these tips to help bolster your loan candidacy:

n Employment history. Among the most important considerations for lenders when qualifying a loan candidate is the borrower's job history, a strong indicator of economic stability.

Lenders like to see at least 24 months of consistent income from a prospective borrower, preferably from the same employer.

If a spouse or another party is also listed on the loan application, the strength of the second borrower's income is also weighed and may become the primary consideration if the second borrower has a steadier stream of income.

n Documentation. It's critical to have records to verify your income and assets prior to loan qualification.

Lenders may ask to review pay check stubs, tax records and other banking records dating back at least two years to verify a borrower's ability to repay a loan.

n Debt and income profile. Carefully research how much you need to borrow and consider doing the math in advance to determine how much loan you can afford.

Keep in mind that while lenders typically seek a borrower with housing-related expenses that do not exceed 28 percent of his/her gross monthly income and whose total debts (housing-related expenses plus any other fixed monthly debts) do not exceed 36 percent, ratios may fluctuate based on market conditions.

n Down payment. In today's tight credit market, a higher down payment toward a home loan may not only enhance a loan candidate's prospects for qualification, it may help lower the interest rate he or she receives on a loan. By most measures, a 20 percent down payment is preferable on a home loan.

Consider reviewing your status as a prospective borrower in terms of the above factors before seeking a loan.

By acquainting yourself with the strengths and weaknesses you may bring to the table well in advance of your meeting with a lender, you can take the time to address any challenges and boost your viability as a loan candidate.

Oscar Dominguez is vice president and branch manager of the Stevenson Ranch branch of Union Bank, located at 25954 The Old Road and the Valencia Bank & Trust branch, located at 23620 Lyons Avenue. Visit www.unionbank.com for more information.His column reflects his own opinions and not necessarily those of The Signal.

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