Why Can’t I Get A loan?

On May 2, 2011 By

Reader Question: Alice in Illiniois asks “Why can’t I get a loan? I’ve applied to the bank and was rejected, and I need money today. Any tips?”

Whether you are purchasing a home, starting a business, buying a car, or figuring out how to pay for school, you know that getting a loan can be hard work! According to the Federal Reserve’s January 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices, banks have continued to tighten their lending conditions to businesses and households. Fifty-seven domestic banks and 22 U.S. branches and agencies of foreign banks responded to the survey.

Banks still have certain criteria they consider …

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Nancy from Seattle, WA. sent us an email and asked us, “I’m about to start preparing my taxes. I recently got a loan and was wondering, is a loan origination fee tax deductible?”

A loan origination fee is also known as an underwriting, administrative, or processing fee. The lender charges the borrower the loan origination fee when the borrower begins the loan application process. This fee is a service charge. It is usually one percent of the borrower’s loan amount. The fee covers the administrative cost of doing business with a lender. Depending on where the loan is filed, local regulations may or may not allow this fee to be …

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Borrowers only pay the interest on the mortgage for a specified number of years for an interest only mortgage loan. Generally, this is a three to 10-year time period. This type of loan is not a long-term solution. Borrowers pay the interest but the amount the borrower owes on their mortgage does not decrease. This loan is ideal for individuals in high-income brackets, young professionals, short-term homeowners, and real-estate investors planning to purchase a home.

After the specified time period is up, a borrower’s monthly payment will begin to increase, even if the monthly rates stay the same. The borrower will not be paying back the principal in addition to …

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I need a loan for $5000 and I own my own home. How does a home equity loan work?

The Federal Reserve defines a home equity loan as a type of second mortgage where your home serves as collateral. In this case, if you do not pay back your loan, you could lose your house. Usually, consumers get home equity loans for major items like education or medical bills. Lenders look at borrowers’ income, debts, credit history, and other financial obligations to determine how long it will take the borrower to repay the loan.

According to the International Business Times, more and more consumers are taking out home …

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If you have ever filed for bankruptcy, you know that it can completely damage an individual’s credit scores and interest rates. People declare bankruptcy for different reasons. Some may have medical bills, others may have lost their jobs, be going through divorce, or defaulted on personal loans. Unemployed people frequently have to declare bankruptcy because of the scarcity of jobs in today’s economy.

Individuals who file for bankruptcy are able to begin with a fresh start—little or no debt! Bankruptcy stays on an individual’s credit report for seven to 10 years after they file. This is a huge burden to have.

Bankrupt borrowers are risky. Credit scores show a lender …

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