Alternative and Special Loans
Financing. It’s almost impossible to buy anything today without it – can you imagine buying a house without a mortgage or a car without a loan? There are lots of different kinds of loans out there, and each differs from the other in a few special ways. In this post, you’ll see a few of the different kinds of loans that are out there and a few tips on how to get a loan that’s right for you.
Interest Only Loans
It can be very confusing trying to decide what home loan to choose because a home is a very large investment and the payments are quite long term. One type of loan that seems very appealing to some people ia an Interest Only Loan. Just the name itself is intriguing, but like the old saying goes, never judge a book by its cover.
As appealing as an Interest Only Loan may sound, it is not ideal for everyone; in fact, with the way the economy is these days some may think this type of loan should not exist. In an interest only loan, only the interest is paid on the loan for about 5-7 years. After this time of interest payment, the remaining balance must be repaid in a lump sum. Interest only loans work very similar to the fancy financing that is seen when a person leases a car; when all is said and done there is a balloon payment that must be paid before ownership is rendered.
An interest only loan best suits those people that are in sales or any job that receives bonuses and commissions regularly. The interest only loan is only recommended to those who know they will eventually have a higher income in the future.
Personal Signature Loans
A personal signature loan is a good option for individuals with bad credit. These loans are also referred to as unsecured loans.
Personal signature loans can be used for any need you feel necessary. You may want to go on vacation, buy a boat, repair your vehicle, buy a new car, consolidate your debts, or remodel your home. Because personal signature loans are not a collateral loan, you need not be concerned about putting your home or assets up for collateral to be approved for the loan. Lenders typically are willing to accept repayments of this loan over five to ten years. The requirements to be approved for a personal loan are your terms of payment, your financial status, and your requirements.
If you have good credit than getting a personal signature loan is a breeze. If your credit is not so impressive, your chances of being qualified for a personal signature loan are still good. Do some searching and you can find a lender that is willing to approve your application. Once you have found that lender, make sure to make all of your payments on time and fulfill your obligation to the loan contract so you can start rebuilding your credit.
Car Loans
Car loans are offered by the bank itself or even at the dealership of your choice. Once you decide to buy a car you may want to research the best prices on the market. In the event you decide to buy a new car, most will have the same price range depending on the model and year of the car. If you choose a used car, the prices may vary according to the year, mileage and what repairs the car would need.
Let’s say that you decide to buy a used car; you could start by searching the internet for loans in the price range of the car you wish to get. When looking for a car loan, you should also consider the APR or finance charge that you will have included on your monthly payments. Once this information has been properly researched you can start looking for a car dealership nearby.
If you already have a car loan and you think the monthly payments are too high you may want to consider refinancing your car. You can refinance your car and get a monthly payment that is lower than the old one. Note that car value decreases after two years and the monthly payment quickly changes in the event you choose to refinance.
If you choose to buy a used car you may not need to get a car loan, you can also opt for a personal loan. Personal loans range from $1,000.00 up to $5,000.00, which is a good price range for most used cars. Remember that all loans are subject to a credit check and most of us are too busy to inquire with a lot of different loan companies and get denied for the smallest blip on our credit report. Do not worry, however, as today many companies are willing to work around small blemishes on your credit report and still loan you the money you need to buy a car.
40 Year Fixed Rate Loans
A 40 year fixed rate loan program is being offered by the Homestretch program to help people have a more affordable way of maintaining their home.
This loan is designed so people have another option, but in this case an option that is more affordable regardless of what your financial situation is. With the economy constantly changing but people maintaining the same rates of pay, a 40 year-fixed-rate mortgage may be a solution for those people who have only dreamed of being able to afford a home with low payments each month.
For the people who are currently in an adjustable rate mortgage and not able to keep up with the changing interest rates, these 40 year fixed rate mortgages are becoming a more attractive offer than refinancing their home.
FHA Loans
FHA is an abbreviation for the Federal Housing Administration. Congress created the FHA in 1934 to assist homebuyers in getting a mortgage. A single or multifamily can qualify to have their loan insured by FHA. The insurance provided by the FHA gives the financial institution protection on the mortgage in case the FHA homeowner defaults on their loan. A private lender issues the loan itself, although the FHA insures it. There are requirements that the loan must meet for the FHA to approve it. The FHA and the HUD are responsible for insuring over 34 million homes since 1934 and are by far the largest insurer of mortgages in the world. The loan amount for a single-family is generally $200,000-$250,000.
If you are interested in getting a FHA loan it is good to have at least two years of consistent employment in the same field. A good rule of thumb is to keep your loan payments around 30% of your actual income. Your credit cards, mortgage, homeowners insurance, and auto payments should not be more than 41% of your actual income. You can have no more than one federally insured loan at a time. If you have had a foreclosure or bankruptcy it must have been at least two years ago with re-established credit. If you have a delinquency in a student loan you are disqualified for the loan.
An advantage to a FHA loan is that your down payment is low, typically 3% or less. Financial institutions can often compete with a FHA loan. Ask your lender for other options that might be available to you. Consider all possibilities and make an educated decision on the right loan for you.
VA Loans
VA loans are guaranteed loans that have been made available to eligible veterans through private lenders. A veteran must apply to a lender to receive these loans. To be eligible the veteran must be buying the home for his or her own occupancy. They cannot be buying the home as an investment. If the loan is approved, the VA will guarantee a portion of the loan to the lender. This helps to protect the lender against the loss of up to the amount that the loan is guaranteed for. This also allows a veteran to receive better financing options from the bank.
There are no maximums set on a VA loan, but most lenders limit them to $417,000. This is because lenders will often sell these loans in the secondary market and there is a maximum on those loans. For loans that are up to that amount, it is possible that the veteran will not even have to make a down payment.
VA loans offer many important features to veterans that are interested in buying a home. The buyer is informed on the reasonable value of the property and the veteran is often able to negotiate interest rates and finance the VA funding fee as well. The closing costs are comparable to other types of financing and there are no mortgage insurance premiums that must be paid. The veteran also has the right to prepay without worrying about prepayment penalties that are associated with other types of home loans.
This entry was posted on Tuesday, October 18th, 2011 at 5:05 pm and is filed under Loans & Borrowing. You can skip to the end and leave a response. Pinging is currently not allowed.
