Regardless if you are looking for a new house, or just needs to have some considerable thing that you want to spend money in, you are probably going to need a loan. You can actually choose different types of loans and in order for you to choose the best that perfectly fits your financial needs, you have to figure out which one is best for you so that the money that you have loaned will not be used with the wrong spending.
To help you get through this daunting process, we prepared an article compiled by HittaSMSLån which will discuss the seven most common types of loans that you should know. This will also give you an idea what are its coverages and other important details in it.
- CONVENTIONAL LOANS- This type of loans are mortgage loans which can be availed from mortgage lending institutions which are not backed by a governmental agency. Conventional loans come in two forms; conforming and the non-conforming loans. Conforming loans varies the amount on your current financial status or the location of your house. The better financial status, the bigger loan you can avail. Non-conforming loans, on the other hand, do not conform with the current qualifications as well as the guidelines set by financial institutions that provide the loan for you.
- SECURED LOANS- If you have a collateral that can be presented just to avail for a loan, then this is considered a secured loan. You can leverage your personal property to avail the loan, if, by default, you can transfer the property to the lender as a collateral. Its interest rate and the amount of your loan depends on the value of the collateral that you presented to the lender as your leverage. In general, the property that has a higher value gets a larger loan with a better interest rate but just like conventional loans, you should also have a good financial status as a good consideration in giving you an approval for your loan. The most common secured loans’ collaterals are either houses, vehicles, savings accounts, and other things that can be considered a good collateral.
- UNSECURED LOANS- Unlike secured loans, this type of loan is not backed by any collateral, but instead, the interest rate and the amount of the loan is determined with your credit history and your regular income. This means, that unsecured loans are easy to apply. In general, unsecured loans are usually known by many as personal loans, or signature loans. You can avail of this loan if you have a stable and good income, a good credit standing, and a stable and well managed financial status.
- OPEN-ENDED LOANS- This type of loan is a fixed-limit line of credit which can be borrowed anew after you were able to repay it accordingly. The best example for this would be the credit cards. The lender or the financial institution that offers this kind of loan approves your application for a certain credit or amount which is usually based on the percentage of your entire financial status and your home’s appraised value.