Secured loans are loans that are given against property, i.e. you have to offer collateral to obtain a secured loan. The cost of secured loans includes interest rate and points.

Interest rate is the price that you have to pay for availing a loan. It is charged as a certain percentage of the original loan amount. The interest rates on secured loans are lower than the rates on unsecured loans. There are several modes of interest payment. Usually, the amount of interest is paid along with the principal amount in the form of monthly installments. In case of a balloon loan, the interest is paid at regular intervals and the principal is paid at the end of the loan period. Sometimes, the entire principal as well as the interest amount is paid at the end of the loan period.

Points are an up-front fee that is charged as a certain percentage of the loan amount. The amount that you pay as up-front fee is inversely proportional to the rate of interest. It all depends on your current financial position. If you have money to pay the up-front fee, then you can save a lot by way of lower interest rate over a period of time. However, if you cannot pay the up-front fee, you will have to pay a higher rate of interest.

A home equity loan or a homeowner