subject: If You Are New To Loans Read On [print this page] Planning to borrow some cash for personal use, in the name of loans? A brief knowledge about loans will help you pick the desirable one. A loan is a sum of money that is given by one party to another for a limited amount of time that has to be repaid according to the terms of the loan agreement. This agreement has the legal acceptance of the terms and conditions by the persons involved in the process. There are many types of loans available based on the needs of the person. There are personal loans, student loans, home loans, auto loans, debt consolidation loans, etc. Any loan approval procedure includes the primary concern of checking if you'll be able to repay your loan. Your monthly income and good credit score play the major factors for the approval.
Personal loans are of two types secured and unsecured. Unsecured loans are given to consumers without security and of high interest rates. Secured loans have lower interest rates and can be taken out for higher sum, but with a security. This kind of loan will use your property, usually your home, as the security. At the end of your loan term you should have repaid your original borrowings and the interest attached to your particular loan, failing to do so will lead in losing your home to the lender. If you have many debts on line to be cleared, then you can go for a debt consolidation loan that provides a loan which pays off some or all of your existing debt, and replaces it with a single loan with a single payment.
A home equity loan is an easy and manageable route to generate extra cash. A home equity loan allows homeowners to obtain a loan in addition to their original loan using the equity in their home. Home equity loans are generally a second mortgage, and are used for personal use. Home equityis the difference between the home'sfair market valueand the outstanding balance of alllienson the property. The property'sequityincreases as the debtor makes payments against themortgagebalance, and/or as the property value appreciates. Ahome equity loan(HEL) is a type ofloanin which the borrower uses theequityin their home ascollateral.
There is a specific difference between a home equity loan and a home equity line of credit (HELOC). A HELOC is a line of revolving credit with an adjustable interest rate whereas a home equity loan is a onetime lump-sum loan, often with a fixed interest rate. Home equity loans are secured loans.With these loans you may borrow up to 80% of the equity in your home. Home equity loans are best used for home improvements that will increase the value of your home.A home equity loan can be a great option to take advantage of, if your home is worth more than you owe on it. If you fall behind on the payments, it can also get you into serious financial troubles, leading you to lose your home.
There are many options in home loans. It basically includes any loans made on the security of a home, which includes even a dwelling unit in a multi-family residential property such as a condominium or a cooperative. The major factors involved in home loans are the mortgage, the interest rates and the closing costs. The approval of the loan may involve the application processing which is expected to be lengthy, mostly, and a survey by the lender on your repayment habits. Consolidation of home loans may work best when you have more than one mortgage involved on your home. There are online mortgage brokers and home loan specialists who can help you with fast processing of papers, and chose the best plan to suit your financial well being.
