Getting a loan can make anyone nervous, regardless of whether they have sat in front of a loan officer before or not. There's something that is a little bit unnerving about having somebody else hold such an important part of your life in their hands. Because loans tend to surround such very important decisions and times in our lives, there are several things that you should always keep in mind whenever you go in to look for one. As a matter of fact, here are three different things that everybody should know about loans before they decide whether or not they are going to accept an offer.
The first thing that you need to understand a little bit about is credit. The credit system in the United States is considered by many to be one of the most un-organized systems in existence. Your credit is rated by three different bureaus, each of which will come up with a different credit number that generally ranges anywhere from in the 400s up to the 700s. The higher your credit number, the better of an opportunity you have to be accepted for one of these loans. Your credit score is something that should always be protected and for good reason. If something should happen and your credit score is lowered, you will find it very difficult to ever be accepted for a loan.
That is where the real danger comes into play. What most people don't realize is that whenever your credit score is checked because you are looking for a loan, it will be lowered slightly. If you are searching around for a loan because you want to make sure that you are finding the best deal that is out there, you may actually be taking yourself out of the running for being accepted for one at all. Find out what the financial institutions are offering without having them check your credit score in advance. This will preserve your numbers and you can have them check your credit score, once you're ready to proceed with them.
A second thing that you should be concerned about is known as a prepayment penalty. Most people do not typically have to worry about paying the loan off ahead of time as many of them will just make the minimum payments indefinitely. There are some loans, however, that include a penalty fee if it is paid off in advance of the loan maturing. Look for this and other types of fees that may be hidden in the loan contract. You would be surprised with what some lending institutions will try to slip by you in this regard.
Finally, you want to make sure that your loan is structured properly. This is especially the case if you are seeking a mortgage loan. Don't fall for low percentage rates that are going to balloon after several years, you will end up hating your home and your loan as a result. Go for a fixed rate interest and find a home that fits within your budget. You may not have as big of a home as you would otherwise but you will be secure and happy in it.
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