Personal bank loans come in two forms: secured and unsecured. This article is going to explore the characteristics of both and give you some hints to help you obtain the personal bank loans that you need.
Unsecured Personal Bank Loans
Unsecured loans are loans that do not require collateral. A bank determines whether or not you qualify for an unsecured loan by looking at a number of things. Your lender will look at your credit score and your credit history. If you are applying for a loan at the same bank that you use for your checking and savings accounts, your lender might take a look at your account histories to see what kind of a balance you’ve been maintaining.
Depending on the amount of money you want to borrow, your bank might also look at your employment history to see whether or not you will be able to repay the loan. If your credit history is questionable or your credit score is low, you might be able to obtain the loan with the help of a cosigner or by agreeing to a higher interest rate
Secured Personal Bank Loans
These types of loans are loans that require collateral to secure. Not just anything can be used as collateral. Most banks require you to put your equity (your home) up as collateral against the loan. This is because the value of your home is not likely to fluctuate while you repay the loan. There are two catches to secure loans. The first is that the amount of money you can borrow is directly to proportional to the amount of equity you’ve built up (which is why secured personal loans are also sometimes called second mortgages). The second catch, and the more important, is that you must repay your loan on time and in full or you could lose your home (or whatever you used for collateral).
There are several things you can do to make sure that you have an easy time being approved for personal bank loans:
1. Make sure your credit is in good shape. Even if your credit is questionable, do what you can to bring up your score and rebuild your history before you begin the application process.
2. Have a cosigner available, especially if your credit is bad. Many banks will grant your loan request if you have a credit worthy cosigner.
3. Educate yourself on interest rate and make sure that you understand exactly what your loan payment terms are before you sign your loan documents. Don’t sign anything that you don’t completely understand.
There are a lot of reasons that people find themselves in need of personal bank loans. Banks understand that sometimes financial difficulties arise and you might need help taking care of them. As long as your credit is in good standing you shouldn’t have any problem obtaining a loan. If your credit is questionable you might try to find a cosigner or consider applying for a secured loan.
By: Terry Edwards
Posts Tagged ‘Second Mortgages’
What You Need to Know About Personal Bank Loans
May 2nd, 2010FHA Refinance Loan Qualifications – What You MUST Know Before Refinancing Any FHA Loan
January 4th, 2010
Before you refinance any mortgage there are certain terms you should consider. The same can be said about the FHA refinance loan. Any mortgage that you currently have on your property can be refinanced into an FHA loan. Refinancing your loan into a Federal Housing Administration loan provides you with a lower monthly payment, the ability to avoid foreclosure or default, or it can help with home repairs. The refinance loan is different than the FHA HOPE. FHA HOPE is a homeowners program that protects individuals from default or foreclosure only.
There Federal Housing Administration makes four types of refinance loans available to you.
• The Cash- Out refinance options allows you to refinance 85 percent of your home’s value. The value is determined by a professional appraisal with the FHA lender.
• A Cash- Out option of 95 percent of the appraised value.
• No cash- out
• Streamline FHA refinancing
There are requirements even with FHA refinance loans that you must adhere to. In the cash out options listed above the borrower is required to own the home for at least a year before applying for the refinance loan. For all four loans the amount you can obtain for refinancing will be determined by the homes appraised value. The calculation for non streamlined loans is a bit more difficult, and not really necessary to discuss other than to say the calculation has to deal with the original mortgage and any second mortgages you might have on the home.
FHA streamline loans can only be obtained if you have an existing loan loan. In this particular loan type you are not given cash, but the refinancing will pay the existing loan off. This option helps you lower your repayment amount in the event that the interest rates have decreased since you were awarded the first FHA loan. In the current economic climate the base rate has significantly decreased, allowing interest rates to decrease as well. For a person who acquired an FHA home loan during the housing boom it could be very lucrative for you to refinance.
The downside to refinancing in the current market is the home values. Many areas are suffering from degraded home values, presenting a situation of negative equity. This may limit your refinancing options. If your home value is still on the positive side under the streamline product, the Federal Housing Administration allows for the closing costs to be a part of the loan if the equity is sufficient.
If you are refinancing to an FHA loan there is no down payment required. This has been somewhat confusing for home owners. Since all FHA loans require a down payment, homeowners automatically assume this means the refinancing products as well. FHA refinance loans work like mainstream remortgages, thus there is no down payment in a refinance situation.
These refinance loans are available to any person who qualifies for an FHA loan. Most refinance products with FHA require that you go through the same qualification process as the regular FHA loan process.
By: J. Stewart
Fixed Rate Second Mortgages For Refinancing ARM Loans
December 13th, 2009
According to the National Association of Realtors, home depreciation is affecting homeowners across the nation. As a result, many consumers are nervous that home values may begin to drop before they refinance their adjustable rate mortgage. Millions of homeowners have mortgage loans that are scheduled to recast which will cause interest rates to rise. Borrowers will have rising monthly payments as a result.
The good news for people who are considering refinancing your ARM is that the current market is yielding low rates with affordable payments blessed with interest only monthly payment options. The fixed rate second mortgages are a whole percentage point lower than the prime rate for home equity lines of credit that are reported in the Wall Street Journal.
The bottom line you need to focus on is whether or not the home equity loan offers you monthly savings by consolidating your debt. If you have the ability to lock into a fixed rate mortgage and save a few hundred dollars a month, then it is time to call your loan officer. Ask your loan representative if you can eliminate your revolving credit cards at the same time you refinance your ARM.
How much money would you save by refinancing into fixed rate loan?
As many of borrowers already know, consumer debt is at an all-time high, and if you have credit card bills mounting each month it may be time to consider a 125% second mortgage. This 2nd mortgage requires zero equity, and the loan balances can even exceed the value of your home. FHA mortgages will allow you to subordinate your existing 2nd mortgage if you do not have enough equity to refinance both loans into one mortgage.
- Second Mortgage Loans to 125%
- Home improvement financing
- Debt consolidation for lower Payments
Fixed rate second mortgage loans can convert adjustable rate rate credit card debt into a simple interest installment loan that yields significant monthly savings and additional tax deductibility as well. Homeowners benefit from reduced their numerous credit cards balances when the compounded interest debts convert to simple interest savings. People are saving thousands of dollars each year, when they consolidate their variable interest loans into a fixed rate 2nd mortgage or FHA home loan.
By: Lynda Nelms