Home loan can come in various flavors. Under the umbrella of home loans, one can obtain one of the following categories: refinance, mortgage, debt consolidation, or home equity loans. We will examine each in further detail.
If you are looking to buy a new property for you and your family, you can apply for a mortgage loan. Typically, the duration of a mortgage loan would range from a few years to 30 years or more and there are many varieties and categories of mortgage loans that you can qualify for. Some lenders extend the loan to individuals trying to rebuild credit and even to sub-prime customers. With the recent financial debacle, however, that might change during the next few years.
Since a mortgage loan is typically made against property as collateral, it is a secured loan.
Many apply for a secured loan in order to pay off an existing mortgage loan. Market interest rates would typically influence the decision as to whether or not to refinance an existing mortgage. Under certain circumstances, refinancing your home may be a smart move and may be able to save you up to hundreds or even thousands of dollars every year.
One of the advantages of home ownership is that you accumulate equity on your property and this equity can be used as collateral in exchange for a loan. You can either apply for a home equity loan (lump sum) or a home equity line of credit (revolving).
Some programs allow you to pledge your property as collateral for a loan. You can then use this loan amount to pay off existing debt or consolidate all your loans into one loan. Since this debt is secured, interest rates, and thus monthly payments, typically tend to be lower.
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