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Home Loan & Home Mortgage Article Series
Considering a Home Owner Loan?
There are different situations wherein a homeowner
may think and decide on getting or applying for a loan. Great
care should be exercised in choosing which one is feasible
for each homeowner. All options must be considered and once
the proper loan is selected, one must have the discipline to
meet obligations that will arise from that. If you are a homeowner
thinking about getting a loan, consider the following:
What types of home owner loans are available?
- Cash-Out
Refinancing. This is an entirely new mortgage.
It is similar to home equity loans in that the amount you can
get depends on the equity of your home.
- Unsecured
Loans. These loans usually have fixed rates that
are charged or added to the principal on a monthly basis. ‘Unsecured’
means you don’t have to back the loan up with any assets.
- Secured
loans. People who apply for secured loans usually
had the current property mortgaged already.
- Home
equity loans. This is when you cash out the ‘equity’
in your home. The value of equity represents what is left of
your home value when the amount you mortgaged it for is already
deducted. People who opt for this usually have a large personal
expense to cover for. Exercise great caution and discipline
in making payments when choosing this type of home owner loan.
Non payment will lead to foreclosure of your property.
- Home
Equity Line of Credit. This is a line of credit wherein
you can make numerous payments and borrowings. This would require
higher payments than what is required; if you want to pay it
off as soon as possible.
How can you stay away from dubious lenders that offer home
owner loans?
The Federal Trade Commission gives consumers some helpful
tips regarding this. Consumers are encouraged to stay away
from lenders that may do any of the following.
- Ask
you to give out false information.
- Push
you for a loan amount greater than what you need or can afford.
- Give
you payment terms that are hard to settle, they might have
hidden interest in foreclosing your property.
- Furnish
you with incomplete information.
- Ask
you to submit and or sign blank forms.
- Do
not furnish you with loan documents.
How much can I borrow with a home owner loan?
The lender might choose to grant you a home owner loan equivalent
to the amount you applied for. However, he may choose to grant
you less of that as well. The lending company usually considers
the following when evaluating your application.
- Your
ability to pay. They will want to know if you have a regular
job, and how much income you receive.
- Your
credit history. They will request a credit report; this contains
all your financial details.
- Other
monetary obligations. They will require you to disclose other
loans or obligations you are currently paying for.
- Your
home’s value. This is in the case of home equity loans. They
will ask your property to be appraised.
Tips on Paying Home Owner Loans
- Pay
regularly. Make sure to save up for and meet your regular
payments. When these go unpaid, penalties accrue and you’ll
end up paying more and more without decreasing the principal
amount.
- Pay
at least the minimum amount due. It’s
not enough to just be regular in your payments. Make sure
to pay the whole
amount due for that period. Leaving some amount unpaid will
still result in additional penalty charges.
- Pay
above the minimum amount due. This
is the best way to get your loan fully paid over time.
By doing this, you lessen
the interest charges and you lessen the term of your payments.
If you can afford to, pay more than once a month.
- Choose
a shorter term of payment. Longer
terms offer lower monthly payments but result in higher
interest charges. Opt
for a manageable short term payment amount on your home owner
loan.
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