If youâve been researching mortgages, or are in the process of taking out a home loan, youâve probably come across the term âimpoundsâ or âescrows.â When you hear these seemingly scary words, the loan officer or mortgage broker is referring to an impound account, also known as an escrow account. You may even be told [&hellip
The post Mortgage Impounds vs. Paying Taxes and Insurance Yourself first appeared on The Truth About Mortgage.
Mortgage Q&A: âWhy are refinance rates higher?â If youâve been comparing mortgage rates lately in an effort to save some money on your home loan, you may have noticed that refinance rates are higher than purchase loan rates. This seems to be the case for a lot of big banks out there, including Chase, Citi, [&hellip
The post Why Are Refinance Rates Higher? first appeared on The Truth About Mortgage.
Yet another year is about to come to an end, and that means it’s time to look ahead to what next year has in store. I think just about everyone wants to see the back of 2020, though it wasn’t all bad news. The housing market actually held up surprisingly well, and mortgage lenders enjoyed [&hellip
The post 2021 Mortgage Rate Predictions: Mostly Flat But More Record Lows Possible first appeared on The Truth About Mortgage.
Everyone likes a discount, right, even if itâs on a small one-time purchase that equates to a nominal amount. For one reason or another, it just feels like a win. Itâs obviously even sweeter if you get a discount on a big-ticket item, as the savings will be much larger. Better yet, how about a [&hellip
The post 10 Mortgage Lenders to Consider for the Best Mortgage Rates (and Fees!) first appeared on The Truth About Mortgage.
While 30-year fixed mortgage rates tend to steal all the headlines, 15-year fixed mortgage rates quietly reached record lows this week as well, per Freddie Macâs weekly survey. This morning, Freddie announced that the 30-year fixed fell to a new record low 2.65%, down from 2.67% last week. That was the first record low of [&hellip
The post 15-Year Fixed Mortgage Rates Just Hit Record Lows: Should You Consider One? first appeared on The Truth About Mortgage.
A consumer loan is a loan or line of credit that you receive from a lender.
Consumer loans can be auto loans, home mortgages, student loans, credit cards, equity loans, refinance loans, and personal loans.
This article will address each type of consumer loans.
Get Approved for personal loan today.
Types of consumer loans:
Consumer loans are divided into several kinds of categories. They include auto loans, student loans, home loans, personal loans and credit cards. Regardless of type, consumer loans have one thing in common: you have to repay the loan at some period of time.
Most people who are thinking of buying a car will apply for an auto loan. That is because buying a car is expensive.
In fact, it is the second largest expense you will ever make besides buying a house. And unless you intend to buy it with all cash, you will need a car loan.
So, car loans allow consumers to purchase a vehicle where they may not have the money upfront. With an auto loan, your payment is broken into smaller repayments that you will make over time every month.
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You can choose between a fixed or variable interest rate loan. But the most important thing is, whether you’re buying a new or used car, it’s important to compare loans to help you find the right auto loan for your needs.
Start comparing auto loans now!
Another, and most common, type of consumer loans are home loans. A home loan or mortgage is a loan a consumer receives for the purpose of buying a house.
Buying a house is, undoubtedly, the biggest expense you’ll ever make in your life. So, for the majority of consumers who want to purchase a house, they will need to borrow the money from a lender.
Home loans are paid back over a period of time. Those mortgages term are typically 15 to 30 years. They can be variable rate or fixed rate. A fixed rate means that your repayments are locked in for a fixed term.
Whereas a variable rate means that your repayments depend on the interest rate going up or down when the Federal Reserve changes the rate.
Over the loan’s term, you will pay back the principle amount of the loan plus interest. This makes it very important to compare home loans. Doing so allows you to save thousands of dollars on interest and fees.
The most common types of consumer loans are personal loans. That is because a personal loan can be used for a lot of things.
A personal loan allows a consumer to borrow a sum of money. The borrower agrees to repay the loan (plus interest) in installments over a period of time.
A personal loan is usually for a lower amount than a home loan or even an auto loan. People usually ask for $500 to $20,000 or more.
A personal loan can be secured (the consumer backs it with his or her personal assets) or unsecured (the consumer does not have to use his or her personal asset).
But most of them are unsecured, so getting approved for one will depend on your credit score, income and other factors.
But consumers use personal loans for different purposes. People take out personal loans to consolidate debts, such as credit card debts. You can use personal loans for a wedding, a holiday, to renovate your home, to buy a flt screen TV, etc…
Consumers use these types of loans to finance their education. There are two types of student loans: federal and private. The federal government funds a federal student loan.
Whereas, a private entity funds a private student loan. Generally, federal student loans are better because they come at a lower interest rate.
Believe it or not credit cards is a type of consumer loans and they are very common. Consumers use this type of loan to finance every day expenses with the promise of paying back the money with interest.
Unlike other loans, however, every time your pay with your credit card, you take a personal loan.
Credit cards usually carry a higher interest rate than the other loans. But you can avoid these interests if you pay your balance in full immediately.
Small Business Loans
Another type of consumer loans are small business loans. These loans are used specifically to create a business or to expand an already established business.
Banks and the Small Business Administration (SBA) usually provide these loans. Small Business Loans are different than personal loans, because you usually have to provide a collateral to get the loan.
The collateral serves as a way to protect the lender in case you default on the loan. In addition, you will also need to provide a business plan for the lenders to review.
Home Equity Loans
If you have your own home, you can borrow money against it. These types of consumer loans are called home equity loans. If you’ve paid off the mortgage on the home, you can borrow up to the full value of the home.
Vice versa, if you’ve paid half of the mortgage on the home, you can borrow half of the value of the house. You can use a home equity loan for several purposes like you would with a personal loan.
But most consumers use this type of loan to renovate their house. One disadvantage of this type of loan, however, is that you can lose your house in case of a default, because your house is used as a collateral for the loan.
Loan refinancing is a basically taking a new loan to replace an existing one. But you get this loan specifically either to refinance your existing mortgage or to refinance your student loans or a personal loan.
Consumers usually refinance in order to receive a lower interest rate or to reduce the amount of monthly payments they are making on their existing loans.
However, reducing to a lower payment will lengthen the time to pay off the loan and you will accrue interest as a result.
Consumers also use this type of loan to pay their existing loans off faster. However, some mortgage refinancing loans come with prepayment penalties. So do you research in order to avoid that extra charge.
The bottom line is consumer loans can help you with your goals. However, understanding different loan types is important so that you can choose the best one that fits your particular situation.
So do you need a consumer loan?
Get Approved for personal loan today.
Speak with the Right Financial Advisor
If you have questions about your finances, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
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