How Much Does Equity Count In Loan Approval ?
If you are wondering how much does equity count in loan approval, you will be surprised to learn that it quite important. The more equity that a person has on his property, the more reliable he is. While it is difficult to quantify the amount equity counts, it should suffice to say that it is important when a lender is checking a person's loan application.
However, it is important to remember that different lenders have different lending criteria, so equity may be very important for one lender, while for the other lender it may not be as important.
Equity is the value of the property less the debts owed on the property. So, as a person pays more and more mortgage on the house, he will build up more and more equity on the house. The more equity a person builds in a property, the more valuable it is for lenders as this equity can be used as collateral when the person is looking for a second loan.
While equity is important when getting a loan approved, there are many other factors that lenders take into account. Some of these factors are credit score of the borrower, credit history of the borrower, the income of the borrower, the amount of loan that a person wants to borrow, the investments that the borrower has, the amount of debts that the borrower has and finally the risk that a lender is willing to take. All these factors and the equity then decide whether the lender will approve the loan or not.
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