Pre-Qualify Before You Buy

Pre-Qualify Before You Buy

Question by FlyATL: Have any of you ever taken out one of those personal loans through a bank/credit card company? I used to get those offers all of the time for stuff like $ 50,000, etc. I have what I feel is great/excellent credit, have a decent credit history and 4 major credit cards (2 of which have no balance, but high credit limits that help my score). I've had a couple of emergencies and ended up using my other two cards. One has around $ 7,700 on it and is currently under a no-interest offer that they gave me. It has probably 8 months or so remaining on that offer. The other has around $ 7,500 on it and is at about 12% APR. That one I ended up putting some dental procedures and such on, which were very much needed. Last credit score of 763. So without someone bashing on me for having balances on credit cards, I'm simply curious about these "personal loans" that I get pre-qualifications for in the mail on a regular basis. Usually from my bank (Bank of America) or from Discover (which I have a credit card with, with no balance). I know that these "pre-qualified" offers do not mean I will be approved for the loan, and it's not a guarantee. I also know that they probably carry some pretty stiff interest. I still live at home with family and we kind of band together to make things not as bad financially on one another. So I do not pay "rent" per se, and I do not currently have my own vehicle, etc. The typical things that zap most people's income. I usually make about $ 1,100 - $ 1,200 a month after taxes. I know that's not a lot in today's economy and may very well be scrutinized if I were to apply for a loan. Currently, I have $ 6,000 cash in a checking account with my bank. It seems that this does not help in any way as collateral even with my current bank (BofA), because they recently slashed my credit limit on a credit card that I have a balance on with them. They cut it down to within $ 300 of my credit limit, which of course made that look bad. In reality, I was thousands of dollars from my credit limit. They did it because I called with a simply question (someone at their company screwed up and I was trying to get something fixed) and they ended up screwing me over not once, but twice. They canceled one of my cards with them completely (it had no balance and I had it for 5 years with them, with no late payments, etc.) The second card had the credit limit slashed. So basically my idea is the approach of trying to get approved for a $ 15K loan through one of these offers (if they approve it) and pay off both credit cards. Then pay around $ 800 a month on the loan, trying to pay it down as quickly as possible to avoid as much interest as I can. With these personal loans, they say "XXX amount per month for X or XX years" in order to pay back certain amounts. Is the payment amount per month fixed? Say for instance, you can only pay $ 450 a month for the set repayment amount and can't overpay the amount, so they can charge you more interest over time? Or can you pay as much as you want on it each month? Of course, I already know about the catch-22 of today. Credit card companies are telling people, "Hey, we have this great balance transfer offer! But wait, you have balances on other cards, and we know that's what the balance transfer offer is for, but we can't approve you because of those balances on the other cards." Also, loan companies are doing the same thing, apparently...but duh, why would people take out loans to pay stuff otherwise? Best answer for Have any of you ever taken out one of those personal loans through a bank/credit card company?:

Answer by stan c
Just because you got pre-approved does not guarantee you'll get the loan. I had a high credit limit with BOA for over 25 years and they too cut in half. I just called and told them to close it altogether.By next year when the banks cash flow drops, they'll start offering new cards with great deals. If you can pay 10% per month on those accounts, it will be paid off in 12 months and you'd still have your $ 6,000.

Answer by Amarnath C
Basically,Don't think about loans n credit cards misuse. All the best.

[pre qualify credit cards bank of america]

Remember when you could call up a lender, tell them how much you make and how much you owe in car and credit card payments and they would tell you how much you qualify for? Well, those days are over... At this point in history, before you ever step foot into a house you are thinking of buying, you need a full doc qualification with desktop underwriting to determine if your entire scenario matches up with investor guidelines to make sure your loan will actually get funded.

summershot.net The Myth of Loan Pre-Qualification

Most deposits are perfectly safe, but the downgrades could hurt people in more subtle ways: Banks may jack up fees and might be reluctant to lend, which could affect mortgages, credit cards and even the job market. "It is normal that the first thing ... Bank downgrades could hurt Americans' ability to access home loans, credit cards

Taking a loan is the best option for many to purchase the house of their dreams. You need to however, pre-qualify for the same. Pre-qualification is the term used to indicate the commitment that a bank or any other financial institution has made to you to give you a particular amount of loan.

Features

Before you go to a lender to get a prequalification, you have to know about its; features beforehand:

It is an oral commitment made by the lender The phone or the internet are good media for the same You have not formally applied for the loan yet The lender has simply skimmed through your financial papers and given the assurance No verification is done by the lender Information to pre-qualify

Pre qualification for loans requires some paperwork on your part.

To pre-qualify for a home loan, you need to provide the following information to the lender:

Income: The amount of money that you receive against the job you do, either on a daily, weekly, monthly or yearly basis. The lender is interested in knowing your disposable income for the month - the money that remains with you after you have paid all the debts.

Tax: Information about the tax you pay is of vital importance to the lender.

Employment: Details of your employment till date. Your tenure with the companies you have worked for is what is taken into consideration.

Assets: Details about the material assets that you own - a vehicle, a house, a land etc.

- like the location (where applicable), the use, the loan against it, the type of the same etc.

Credit: You need to give the lender your social security number so that your credit report/scores can be checked. This will help them ascertain your credit worthiness.

Expenditure: A detail of the payments that you make every month will help the lender get an idea of your expenditure.

Addresses: You have to give the lender addresses of the place/places you have lived in the last three years to help them understand your stability.

Bankruptcy/Foreclosure: The lender will like to know whether you have gone through a bankruptcy or foreclosure in the past. If yes, all the details about the same is required.

Bank balance: The lender also needs to know the amount of money you have in different bank accounts.

Advantages of pre-qualifying

Here is a look at what you gain by prequalifying:

You get an idea of the money you can afford to buy your new home It is not much of a trouble as it involves no paperwork No money is charged for pre-qualification Points to keep in mind before going for a pre-qualify

The amount of premium you have to pay and the term for it. (Your lender might offer you a whopping amount of loan, but you should judge your ability to re-pay it.). This is because you have to bear many other costs while buying a home like broker's commission, relocation costs, loan processing charges, closing costs etc.

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