Secured Home Loans
The reason it is easy to get a home loan also known as a
mortgage is because the home itself is being offered as
collateral. You can get a low interest rate on a home loan for
that simple fact. Loans given against collateral will get you a
lower interest rate. Banks have the assurance of collecting on
their loan if you don't pay.
The lein against the home is a claim against the property and
the loan has to be paid in full before you can eliminate the
lein against the property. If you don't pay the loan in full,
then when you go to sell the home, the balance of the lein is
taken out first and given to the first lein holder, usually the
bank or finance company. After the balance is paid to the lein
holder, then the rest of the money is yours unless you have
other leins against your home.
Secured home loans can come in a variety of packages including:
Fixed Loans
Variable Loans
Capped
Discounted
A fixed loan means the interest rate on your home loan is
"fixed". The rate will not go up or down during the term of the
loan.
A variable loan means your interest rate will fluxuate. If the
prime rate is up, your interest rate goes up. If the prime rate
is down, your interest rate will go down. Variable loans are bit
scary because you never know what the interest rate may do and
it can change your home payment by a few dollars or a few
hundred dollars.
A capped rate mortgage means there will be a ceiling on just how
how your interest rate can go. This si to protect you in case
interest rates go sky high. Your capped rate will only reach the
ceiling amount and go no higher even if the interest rates go
much higher.
A discounted rate loan means that your variable rate is based on
a discounted rate at a certain level below the variable rate for
a specified amount of time.
Secured home loans can provide you with emergency cash or other
cash needs you have. The loan can be used a variety of ways
including:
1. Debt consolidation
2. Education
3. Medical bills
4. New car
5. Vacation
6. Misc
The more equity you have in a home, the more you can borrow.
Even if your credit is not A+, you can still get a loan when you
have equity in your home and if you can prove you have the
ability to pay back the loan.
Remember that getting a secured home loan will affect your
budget, maybe your taxes, and insurance. Have all the questions
you need answered ready for your loan officer. Be sure to get an
itemized list of ALL the fees that will be due with getting the
loan, the interest rate you will be paying, the length of the
loan, and if there are any early payoff penalties. You don't
want to get penalized for paying your loan off early. (Some of
these fees apply because the finance company loses interest
money if you pay your loan off early)
Check about insurance in case you get disabled or lose your job.
This insurance can make your loan payments if you qualify. The
rules are much different for the self-employed, so be sure to
ask about that before you buy insurance for a loan.