Bad credit home equity loan,
Fixed rate home equity loan,
Second mortgage and home equity loan
For many, the American dream begins and ends with the purchase of their very first home. But you will most likely not be able to put down all the money required to purchase your first home. So, you will need to get a home loan - or mortgage - in order to move into your dream home. But getting a home mortgage can be a daunting task.
what is a mortgage? :-
Basically, it is an agreement between you and a lending institution that says you will repay your loan at a certain interest rate over a certain number of years. The mortgage will be secured against loss with your new home, so if you default, the lending institution will take ownership of the home.
What is Interest Rates? :-
Most likely, you are familiar with interest rates from your credit cards or perhaps a personal loan or car loan. The good news is that a home mortgage usually carries a much lower interest rate than credit cards or personal loans. This is because a home mortgage is for a much larger sum, and the loan is paid off over a longer period of time, which means the banks get a steady stream of income. Payments are generally monthly, and the repayment timeframe will be from 10 to 30 years.
Types of home mortgages :-
But, no matter what type of credit you have, there is most likely a home mortgage that is available to you. So keep trying and get into your dream home now!
- The first type of home mortgage is a fixed rate home equity loan :-
where the money you borrow is paid off at a fixed interest rate over a certain period of time,
say 20 or 30 years. This is the most popular type of home mortgage since most borrowers like to know what their monthly payments will be over the course of the loan. Plus the fixed rate mortgage is not subject to interest rate fluctuations like the next type of mortgage.
- The second type of loan is the variable home loan :-
which has a variable or changing rate of interest. Should the Reserve Bank determine that interest rates will move up or down in a particular quarter, then your lender has the freedom to also do so accordingly. If the rates are heading downwards it is ideal for borrowers. But should they begin to trend upwards this can spell danger for many people who live on a tight budget and already struggle to make their monthly repayments.
- The third loan, which is becoming more popular in America
is the bad credit home equity loan ( known as the low docs ) :-
loan. Bad credit home equity loan or low docs home loans may sometimes be slightly more expensive in terms of setup or maintenance fee and usually attract a high rate of interest over the course of the loan. This offsets the lenders increased risk at the borrower having a poor or indeed no credit history and possibly defaulting on the payments after getting the mortgage. These loans are particularly popular with people who have a bad credit history, people who have low incomes including those who receive social welfare payments and people who are self employed.