Purchasing a home may be the largest financial investment you’ll make in your lifetime. Unfortunately, it’s hard to muster the exact cash needed to finalize your new homes sale on the closing day. Millions of home buyers all over the world have either an active mortgage loan that they’re currently paying for or are in the process of applying for a mortgage loan. One option buyers have to secure a mortgage loan quickly and efficiently is applying for a secured loan. Here are a few things to know about secured loans and to see if they’re right for you.
Understanding Unsecured Loans
Lenders like to take all the necessary precautions to ensure that they will receive repayment on-time and in-full. Unsecured loans are often given out to homebuyers with an exceptional credit score and credit history. Individuals with a poor credit score and poor credit history face at higher risk of being denied a mortgage loan.
Understanding Secured Loans
If a buyer’s credit score or credit history is unfavourable, they can apply for a secured loan. Lenders will distribute a secured loan in exchange for substantial collateral; in this case, one’s home would suffice. Essentially, buyers grant part ownership of their home to the lender until the mortgage is paid off. If a buyer fails to make payments, their home will foreclose, and they will lose legal access to their property.
Benefits of Choosing a Secured Loan
Whether you choose an unsecured or a secured loan, it’s equally important to pay your dues off on-time and in-full. If you’ve been denied an unsecured loan, here are a few of the good aspects of being approved for a secured loan.
- Possibility of being offered a lower interest rate
- Helps secure you a much-needed loan even if you’ve been denied on previous occasions
- Responsible repayment will improve your credit score and increase reliability amongst lenders
It’s very easy for buyers to become overwhelmed as they seek out prospective homes and assess their mortgaging opportunities. It’s critical to think about the big picture when applying for a secured or unsecured mortgage loan. Many homeowners rush themselves into accepting the terms and conditions of a mortgage so they can put in a qualifying offer on a home they like. Monthly payments are not all that buyers should consider, take refinancing as an example. Refinancing is commonly used by homeowners to reduce the payments of an expensive loan into a more manageable loan. If scenarios like these are not accounted for, homeowners may end up in unfavourable financial situations.
At Mortgage Forces, we want every one of our clients to maximize the potential of their financial capital. We’re here to help you use your hard-earned money and well-earned credit score to your advantage. For more information on secured and unsecured mortgage loans, contact Mortgage Forces today!