Homeowner Loans Unsecured – A Boon for Borrowers
Homeowner loans unsecured are a really smart option for those homeowners who need money but not at the cost of risking their home. It also relieves them from the crunch of financial requirements. The amount disbursed can be substantial however the interest rate is a little bit higher than the typical rate for a secured loan. The loan can be advanced to your bank account and payments can be withdrawn from the same bank account on a monthly or biweekly basis, whichever is preferred by the client.
Types of homeowner Loans
Homeowner loans can be secured or unsecured and both of them have advantages and disadvantages, depending on your perspective and your own personal criteria when it comes to borrowing money. Both loan types can be used for a variety of purposes and are not restricted in anyway by the lenders or the banks that you obtain the loan from.
These loans can be used to pay for renovations to your home both inside your home and outside. They can be used to pay for a new car or repairs to your car and they can be used to pay for a vacation. Most consumers will have a variety of reasons for inquiring about a homeowner loan.
Homeowner Loans Unsecured
Unsecured homeowner loans are approved solely based on the credit rating of the borrower. There is no security offered or requested. In most cases the lender is looking for a good to excellent credit rating, a stable job and a debt ratio of less than 35%. They may have additional criteria; however these seem to be the main criteria that are used. They will approve homeowner’s loans with poor credit ratings; however the amount of the loan and the interest rate charged may be higher to reflect the increased risk.
The major advantage of these loans is that there is no security needed. The major disadvantage of the homeowner loans unsecured is that the interest rate is a bit higher than other types of loans.
Secured Homeowner Loans
Secured homeowner loans on the other hand require some form of security to be provided to protect the lender in a situation where the borrower is unable or unwilling to repay the loan. Often borrowers will provide their home as collateral for the loan. If they fail to make payments on the secured homeowner loan, the lender may have to foreclose on the home in order to obtain his loan.
This is the major disadvantage of the secured loan. The major advantage of this type of loan is that the interest rate is usually lower than other types of loans which reflect the perceived lower risk of default. After all who is going to risk losing their home?
Both of these loans require the borrower to have a bank account that will allow both deposits and withdrawals from. The lender will deposit the proceeds of the loan into the account of the borrower once the loan is approved. The lender will also arrange to make automatic withdrawals each time a payment is required. The payment can be once a month, once every two weeks or even once a week if the borrower would prefer. Most lenders will support these types of repayment options for homeowner loans that are unsecured or secured.
Borrowers should always make sure that there are sufficient funds in the account to avoid penalties and additional fees for insufficient funds payments. These fees can be expensive and it can also cause the lender to become concerned about your ability to repay the loan.