Cheap Loan Secured

admin — Fri, 19 Mar 2010 08:25:58 +0000

Lenders take varying degrees of risk when extending loans to borrowers, since there is always the possibility that he or she will default on the loan, i.e. miss the payments or simply run away from the responsibility of paying it back. Even when a loan is secured against a purchase, such as a home mortgage, and they are allowed to take the house in lieu of payment, they still have to find a new buyer to recoup their loss. In worst cases, when the loan is unsecured, lenders risk losing the entire amount of the loan, or have to go through the tedious and sometimes expensive process of going through a long collections process, which may or may not recover all of their money.

For these reasons, all but the most unscrupulous lenders are looking to minimize their risk when evaluating a potential borrower. A lender is looking for a borrower who gives every indication that he can repay the loan. So, as a borrower, you want to appear trustworthy and financially prepared to repay your loan in a timely manner.

One of the main ways you can establish a lenders confidence is to present them with a strong credit history. Your credit history doesnt need to show large credit limits or buying power, just consistent payment. Even if you only have a history of paying off small amounts and keeping small balances, this shows financial discipline and trustworthiness. You have proven yourself to be faithful to your commitment to pay back what you borrow.

In the eyes of a lender, good credit has more to do with habits and practices than credit limits and account sizes. If you have a history of paying off your credit card on time and a steady income, you can expect to receive a loan up to the limit your income supports.

The second major factor in a lenders decision to grant you a loan is your income. Most lenders work on a percentage rubric of monthly income versus monthly payment size in determining whether a loan is right for you.

For instance, if your monthly income is $2,000, and the potential mortgage payment on a new home would be $1,000 per month, you are unlikely to have the income to support that mortgage. On the other hand, if you can show a potential for growth in your income, such as a pending promotion or obtaining an advanced degree, you may be able to convince a lender to bank on your bright future.

Note, however this is weighed against other financial responsibilities you may have, such as existing loans or balances on your credit card, your age, and the kind of profession you are in. If you are lucky, in the end, to get the approved loan, creditors may tuck in the added risk into your loan arrangement by charging higher interest. Thus, if you have a poor credit history, it may be of benefit to fix existing debts and establish a better rating before applying for a larger loan like a mortgage.

Cheap Home Loan

admin — Sun, 21 Feb 2010 17:12:05 +0000

Cheap Home Loans: What is an APR?

“APR” is one of the most misunderstood terms in the world of home mortgages. While you might know that it means “Annual Percentage Rate”, you may not know that it includes more than the interest rate. APR is a figure used to determine the yearly cost of a new home loan including all other fees like points, origination fees, and lending fees. A lot see this as something hidden yet it is a clear amount being paid on mortgage.

Years ago, it was hard to determine the total cost of a home mortgage without reading all of the fine print or using a sophisticated mortgage calculator. While one lender might offer you a 7.50% interest rate and another offers you 6.00%, the better deal isn’t so obvious. Overall, the 6.00% loan could be much more expensive with all of additional fees.

The federal government requires lenders to quote APR because loans frequently are offered on different terms. To extend the inevitable fruit analogy, differing loan terms from different lenders can make it hard to figure out which offer is a sour persimmon and which is a real peach. APR helps you identify the peaches.

APR’s are Your Friend

To address deceptive marketing tactics, the federal government enacted the Truth in Lending Act, which required that lenders advertise and make explicit the Annual Percentage Rate associated with their new home loans. The upshot is that APRs are your friend; they allow you to compare offers from different lenders on a level playing field.

However, the APR system is not perfect. In some cases the Annual Percentage Rate won’t include extra fees such as title insurance and appraisal. In general, the best method for loan shopping is to ask for a good-faith estimate, which details all costs and gives you a total estimated cost of the loan using a mortgage calculator.

APR takes into account some costs of getting the loan, including points, most loan fees and mortgage insurance. It does not take into account certain charges, including non-refundable application fees, late payment charges, title insurance premiums, and fees for title examination, property appraisals and document preparation.

Home Loans – Do Your Research

The important thing to remember is that the APR is a good basis for comparison between new home loan offers. When you get further in the process, you can dig deeper to get yourself the best deal possible.

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Cheap Loan Secured

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