It’s not as easy to get a loan as it used to be. When you do find a loan, it’s usually on terms that just aren’t affordable. But for those who own their own homes, loans with good repayment terms are still within reach.
Secured home loans are simply loans against the equity in your home. In simple terms, secured home loans use the property in your home as collateral for the loan.
If you miss payments on the loan, the lender simply becomes the owner of your home. If you make the loan payments, you benefit from good credit.
It makes sense that if the lender has consolation in the event that you miss payments, the lender considers the loan less risky. As a result, the lender is more willing to offer you competitive loan terms. Even if you lose your job and can’t make the payments, the lender will at least be able to recoup some of the money by selling your home.
The added security in a secured loan is why home loans often have APRs that are 1/3 of what you can get for an unsecured personal loan. The bottom line is that you end up paying a much smaller amount of money.
In addition to lower interest rates, you may also be eligible for a much larger secured home loan than an unsecured personal loan. If you are an average person, the most valuable thing you will ever own is your home. Lenders know that not only is the loan secured with equity, but the home you provide as collateral is worth a lot to you personally.
You will do everything in your power to maintain ownership of the home. For the lender, this means that he will work hard to make his payments on time.
The amount of money you can borrow is important when trying to pay for a college degree or a medical emergency. Many people go one step further and borrow enough to pay off all other debt. Your debt is then consolidated into a single secured home loan at a very reasonable interest rate and monthly payment.
As long as payment is made each month, debt collectors disappear and month-to-month expenses become manageable.
There are a variety of other types of loans you can get, but few come with payment terms compared to secured home loans. Most of them are government-subsidized or government-guaranteed loans, for which you qualify only under specific circumstances. So if you need to get an affordable loan to get your finances in order, you’ll want to consider a secured home loan.