Secured home loans are typically also known as home equity loans where your home is used to secure the loan. This loan can be a fixed amont for a fixed term, or it can be a revolving line of credit that can be drawn down as needed. These loans are often taken out to cover major expenses such as medical bills, college education costs, automobile purchases, or home renovations.
The loan amount in this type of loan can actually be a credit limit which is calculated by taking a percentage of the home value minus the balance owed on any existing mortgage loan. Qualifying for a secured home loan is no different thsan qualifying for any other type of loan. It boild down to your credit history, income, and current debt load.
Secured home loans usually come with a variable interest rate that is tied to some publicly available financial index such as the prime rate or one of the Treasury rates. Mnay lenders will, at some point in the life of the loan, offer the availability to change the rate to a fixed payment rate. Make sure you research all terms and conditions of any loan you are evaluating to see if this option is available.
As with other home loans, there are also closing costs associated with obtaining a secured home loan. In addtion, based on the loan to value (LTV) ratio (loan amount divided by home appraised value), there may be private mortgage insurance (PMI) that will need to be paid. This typically true of any loan over 80% LTV.
When evaluating secured home loans, research your lenders carefully. Choose a lender that specializes in home equity loans and will work with you during the processing of the loan.
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This post was written by admin on April 16, 2009
