There are many advantages to owning a home, including using the equity in your home to access multiple borrowing options that you otherwise wouldn’t have access to. Examples include secured lines of credit, mortgage refinancing, and secured personal loans.
Owning a home can allow you to borrow money for a myriad of different reasons. Here, we will discuss pertinent information about secured loans and why homeowners may want to look into them.
Benefits of Secured Loans
By obtaining a secured loan you actually improve your chances of obtaining a lower interest rate, vis-a-vis an unsecured loan. This is because a secured loan involves using your home as collateral in order to secure the loan, which greatly increases the likelihood that you’ll not only pay off your debts but also do so on time. Your lender will feel more confident in your ability to make your payments on time and will reward you with a lower interest rate that will save you more money down the line.
Furthermore, you may also be able to qualify for more money via a secured loan. For instance, you may be able to qualify for tens of thousands of dollars; money which can be reinvested into home renovations or emergency repairs.
A secured loan may also allow you to enjoy a longer repayment term if needed. For instance, you may be given ten years to pay back a secured loan, which will allow you to manage your finances better, thanks to the added flexibility and more affordable payments.
Drawbacks of Secured Loans
While secured loans have several benefits, there are certain scenarios where an unsecured loan may be a better option for you. For example, the application process for a secured loan will take longer than the process involved in qualifying for an unsecured loan. This is because your lender will need to perform some due diligence on their end in order to ascertain the value of your property.
If you require funds on the same day of your application then an unsecured loan would be a better option for you. However, if you are able to put off your spending for a while then a secured loan is generally the better option, as you will be able to obtain the best interest rate by taking the secured route.
If you opt to pay back your loan before the term ends then you will have to pay a fee. The amount will fluctuate depending on how big the secured loan is. You will usually not have to pay any fees for deciding to pay back your loan early if it is for an unsecured loan. As can be seen, secured loans have advantages and disadvantages, depending on your unique situation and your personal needs.
To learn more about secured loans, call Northwood Mortgages at 888-495-4825 or contact us here.
