All lenders have a list of factors they keep in mind when considering an individual’s home loan application. All applicants do not get their applications accepted. The reason being that, financial institutions only provide loans to applicants who have the ability to repay them on time. The three most important factors that a lender must consider then reviewing a home loan application are:

1. Credit history

A factor that all creditors keep in mind when considering an application is the borrower’s personal as well as business credit. One should always obtain their own credit history before applying for a loan to see what can be done to improve the score if it is low. A bad credit score arises due to consistent late payments and defaults on loan repayments. Creditors avoid offering loans to such applicants as they cannot be relied on to repay the loan provided on time which is a major loss for the creditor. Hence, an applicant must take steps to ensure they have a high credit score.

2. Ability to repay the loan

All creditors require an applicant to provide documents about the amount of salary they earn. An applicant is required to provide documents about his monthly earning to check whether or not they can afford the loan or not. The purchase behavior of an applicant is also taken into consideration. The reason being that even if an applicant earns a reasonable salary if they spend most of it each month they will still not be able to afford the loan. Applicants must try to reduce their monthly expenditure to accommodate the loan repayment. One can also use a home loan eligibility calculator to find out how much loan amount they are eligible for. This can help one plan their finances in advance to ensure no default occurs.

3. Collateral

For most loans, creditors require the applicant to provide collateral. In the case of a home loan, the house purchased is usually put in as collateral by the applicant. This means that if a borrower for certain reasons cannot repay their loan, the financial institution can seize the house and sell it to get back the loan amount. It is for this very reason that an applicant must plan their financials in advance to ensure that no default causes the bank to seize their house.

Applying for a home loan is a decision that must not be taken lightly. It is for this very reason that banks suggest customers to make use of the home loan eligibility calculator provided to find out the loan amount they are eligible for. This allows one to start saving in advance and make a plan to help repay the EMIs each month on time.

There are many kinds of federal loans that are eligible for federal loan consolidation. The only kinds of loans that are not eligible are privately-funded loans. Other than this, a person with a more or less stable financial disposition can be easily consolidated within one or two months of application.

Backtrack – America’s in Debt

According to the FTC:

“Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car?”

“You’re not alone. Many people face a financial crisis some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.”

As the FTC stated, having debt doesn’t have to be the end of the world. Consolidation, including federal loan consolidation gives a person a chance for financial security- if the repayment is done well.

Eligible Agricultural Loans

These loans are eligible for federal loan consolidation:

1. Farm loans – operating loans are bestowed by FSA or the Farm Service Agency. These loans are bestowed to farmers that are unable to acquire necessary credit to continue their livelihood.

2. Commodity marketing loans – when commodity crops are having a hard time, this loan can be used to bolster production and sales.

3. Ownership loans – ownership loans are bestowed to farmers that cannot acquire credit from the Farm Credit System and similar entities due to unforeseen disasters and economic difficulties.

4. Farm storage loans – as the name implies, these loans can be used for the construction of grain storage facilities.

Eligible Business Loans

The following are also eligible for federal loan consolidation:

1. Small business loans – can be traced back to sec. 7 of the SBA or Small Business Act.

2. Disaster loans – if a small business or an entrepreneurial outfit has experienced economic harm in an area that has been declared an area of disaster, this loan is bestowed. The assistance comes from the Small Business Administration.

3. Indian loans – American Indians can apply for this loan if they are having a difficult time acquiring any form of commercial credit. This allows members of the American Indian community to engage in small businesses without being redlined by private lenders.

4. Microloans – start-ups and other very small businesses can be started with microloans.

5. Physical disaster loans – similar to disaster loans, these loans are given to businesspeople who have had experienced structural damage in disaster areas.

Managing Debt

According to Ernst Derek, a CPA and credit counselor from Minnesota:

“The development of a good budget plan is always the first step to debt management. It has nothing to do with how smart a person is or otherwise. It’s about knowing exactly how much you can afford on a monthly basis. Consumers should never be afraid to face the real state of their financial affairs.”

Derek continues with:

“Creditors and loan holders should also be your allies. They’re not really enemies. They just want you to repay the debt, it’s that simple.”