Article Surfing Archive

Did you ever imagine that your home can prove to be much more than a mere shelter? Something more than just a roof over your head? Well, once you enter the loan world, you sure cannot overlook the value of the asset you own. If you are a homeowner, you have a horizon of opportunities where taking a homeowner loan is considered. A homeowner loan is backed by your home, i.e. it is a secured loan and is so called because you put up your home as collateral or security for the lender, against the amount borrowed. Homeowner loans are straightforward and are available to every homeowner irrespective of your credit history. The money availed through homeowner loans can fund innumerable financial needs and can provide opportunities galore if used well.

Homeowner loans can be modified as per your financial standing. The main attraction of these loans is the low interest rate offered on it. Since your home is a security for the lender, you, as the borrower benefit too by having lower interest rates and flexible repayment options to deal with. The latest report on homeowner loans reveals an interest rate as low as 5.1%. However, in this rather smooth sailing journey, there is one road block: in case you default in your monthly payments, your home or property is liable to confiscation by your creditor. Your creditor holds the claim on your home until complete repayment.

Another reason for a taking a homeowner loan would be if you had poor credit history. Lenders look more favourably on people who are homeowners as this exhibits a commitment to repay a large amount of money over a longer period. Homeowner loans could take longer to process because they necessitate valuation of collateral. Homeowner loans like any other secured loan permit loan amounts of *5,000 to *75,000 with repayment terms of 5 to25 years.

There is a general tendency for the equity in your home to rise owing to home improvements and other developments made by you. Sometimes you do not play a part in this at all because real estate soars due to any attraction in the vicinity like a mall or development of infrastructure. All this aesthetically adds to the value of your home. Homeowner loans take advantage of the equity in your home and hence are commonly known as Home Equity Loans as well.

Lenders are very cautious about the amount they lend. Their priority is value of collateral and prompt recovery of the loan. Creditors prefer granting amounts less than or equal to the market value of your collateral. A borrower with exceptional credit history can expect amounts up to 125% of the collateral, while someone with a turbulent standing may get about 60% of it. There is more scope to borrow larger amounts as long as you satisfy the lender of your ability to repay the loan.

A few benefits of Homeowner Loans:

*Home owner loans are of immense help to people who prefer not to sell their home, but need resources to meet over some contingency.

*People with poor credit histories: C.C.J*s, defaults, arrears, etc. can get good deals as long as they have collateral i.e. a home. Thus, good credit scores are not a must.

*Home Owner Loans offer low interest rates and easy repayment options.

*The loaned amount can be used for any purpose as per the borrower's requirement.

*Homeowner loans are ideal for those who find it difficult to get loans from their local bank and for those who do not wish to sell their home when in need of resources to meet over some contingency.

Some lenders apply a charge to home secured loans if they are paid off before the due date. This is called a redemption penalty and can be up to two months interest * a significant additional cost. If you consider repaying your loan earlier than agreed, then it may be wise to take home secured loans that do not have a redemption penalty, even if you pay a slightly higher APR.

Comparing interest rates offered on homeowner loans from different lenders gives you a good idea of how competitive they are and familiarizes you with interest rates. It is imperative to ascertain that you can meet the repayments before signing the credit agreement. However, attractive it gets, *Look before you leap!*