Loan types such as a traditional mortgage, refinanced mortgage, home equity loan, bad credit loan and debt consolidation loan are available to homeowners with a good credit rating. Traditional mortgages are an excellent option for most homeowners since they provide lower monthly costs than many other loan types. However, if you have a relatively high credit score and a relatively high down payment, you may be better off with a traditional mortgage. You may also benefit from using a traditional mortgage if you plan on paying it back early or have other long-term plans that require you to make payments for several years. If your credit score is low, however, a traditional mortgage probably isn’t a good choice for you. Here are some tips to help you shop for the best mortgage when you have less than perfect credit.
Home Equity Loans: These mortgages are based on the equity in your home. Unlike other mortgages, these loans are not based on the value of your home. These loans typically have a much longer term, which means that you’ll pay more interest over the long haul. They also come with a much higher down payment since the lender backs the loan with your home equity. Home equity loans are common loan terms for borrowers with good credit, although they are usually reserved for people who are close to retirement age.
Installment Loans: This is a broad category that includes many different small business loans. Most installment loans allow you to take out a loan amount that can be paid back over a period of time. The amount is determined by your income and your down payment. They are usually designed for people who will be unable to repay all of their debt at once. Small business loans also come in many different forms, including commercial auto loans, installment business loans, and residential auto loans.
Unsecured Loans: These types of loans are generally for those with less than perfect credit. Your credit union, credit card provider, or bank may offer you an unsecured loan to cover some or all of your expenses. However, you may be required to put up some collateral such as your vehicle, real estate, boat, recreational vehicle, or other item of value. You’ll have to make your payments to the lender and you may be subject to high interest rates because of this risk.
Debt Consolidation Loans: A debt consolidation loan is a type of secured loan. This means that you are able to combine your smaller monthly payments into one larger payment with a lower interest rate. You can use this money to pay off all of your current debts or to consolidate any debt that you may have. This option is great for those who need to lower their monthly outgoings while improving their credit score.
The next time you go to the bank to apply for a loan, be sure to ask about debt consolidation loans or payday loans. These services can be extremely useful for those with bad credit, but who still want to keep their small business or personal finances afloat. In fact, many borrowers of these types of services later find that their credit scores improve considerably after making their initial payments. As an added benefit, many of these lenders also offer additional services, such as budgeting help, credit counseling, and information on how to avoid future debt. If you’re ready to take your credit problems to the next level, it’s time to contact one of your local lenders today.