Categories
Mortgage

When Should A Homeowner, Consider, Refinancing?: 4 Possibilities

From time, to time, many homeowners, consider, whether, it is the best time, to refinance, and replace their existing mortgages! Since interest rates, fluctuate, and nobody, has, a so – called, Crystal Ball, it makes far more sense, to seriously consider, and evaluate, when it might make, sense, to do so, and when to keep, what you presently have. A wise homeowner proceeds, wisely, in order to achieve, his best interests, and, with that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 4 important considerations, every homeowner should be aware of, and understand, in order to wisely proceed.

1. Depends on homeowner’s current credit, and house’s appraised value: While many individuals maintain, or improve, their personal credit rating, from the time, of their original mortgage, to the present, some, have experienced, some financial reversals, or other adverse conditions/ scenarios, which might make them appear, less credit – worthy! In addition, whether one, originally, purchased his house, at a price, which was lower, than the present, appraised value, is, also, a key factor. Those with better credit, might qualify for a more attractive, mortgage interest rate, than others. One must, also factor – in, closing costs, etc, to determine, whether this makes sense!

2. Terms/ length of existing mortgage: If one is locked – into, a longer – term, low – interest rate, it may make little sense, to refinance! However, for those, with some sort of adjustable – term/ rate, vehicle, under certain circumstances, it may be a good time, to refinance! For example, let’s assume someone presently has, a 7/ 30 mortgage, meaning, a fixed rate for the first seven years, and then, adjusts, if he is presently in years, three, through, six, and today’s interest rates are historically low, and one isn’t comfortable, with the prospects, in the future, when his rate, will change, he should consider his options.

3. Present interest rates: Are today’s rates, historically, low, or high? Do the financial/ economic experts, believe, they will remain so, in the longer – term, and why? How might changing rates, work, either, for, or against you?

4. Costs of refinancing: Remember, when one refinances, he, often, faces, considerable refinancing costs, including, taxes (in some states), appraisal fees, filing fees, and other charges, often, lumped – together, into a category, referred to, as Closing Costs. How many years, at a more advantageous rate, would it take, to make up, and pay for these additional charges?

Wise homeowners, recognize and realize, times, and conditions change, and evolve, and act, accordingly! Will you pay keen attention to the possibilities, and what might make the most sense, for you?

Categories
Unsecured Loans

Unsecured Signature Loans: Loan Possibilities With No Security

At first glance it would appear that any lender that approves an unsecured personal loan to someone with bad credit is taking an unnecessary risk. If the person with bad credit supplies some collateral to the loan, it does not seem as risky. After all, if the person defaults the collateral is passed to the lender to repay the loan.

But this appearance of high risk when it comes to unsecured personal loans, also known as signature loans, is not as real as it would appear. It is true that the exact same loan, including principal, interest and term length, made to two people with the same bad credit rating would be more risky for the person who does not supply collateral as compared to the person who does supply it.

But that is why a lender would not offer the same terms to both people. The lender will make a profit providing a loan to each of the people. It is just that the person without security will have different loan provisions.

Collateral Does Make a Difference

Risk is all about perception. The risk is perceived to be higher for the person without collateral than for the person with collateral. Collateral lessens the risk because it guarantees repayment.

But most people with bad credit do not have any collateral to offer. Common forms of collateral include family jewelry, cars and home equity, but anything used must match the loan amount. If you wish to supply collateral for a $10,000 loan, you need a $10,000 asset.

This is why approval for unsecured personal loans involves higher interest rates and often strict penalties for missed payments. This also places a limit of about $25,000 for the largest unsecured personal loan available.

If Collateral is So Good, Why Offer Unsecured Loans?

Why would lenders ever accept the additional risks of unsecured loans? A couple of things come into play here. First of all, the lender will approve an unsecured personal loan with provisions that make it more profitable for them due to the higher risk on not getting repaid. Additionally, most of the people who suffer from bad credit want to improve their credit rating. This supplies the borrower with an extra incentive to make timely payments. When this psychology of borrowers is introduced into the loan equation, it turns out that the risk of default is not as large after all.

Affordability is the biggest obstacle when it comes to a large unsecured personal loan. Lenders are not stupid; they know that if they can find ways to make the loan affordable, that people with bad credit will do business with them. Lower monthly payments mean fewer missed payments.

The easiest way to make a loan more affordable is to extend the life of the loan. The longer the repayment period, the smaller the individual payments will be. Lenders make their profit in the interest rate and longer repayment terms mean more interest payments over time.

Options Do Exist

Applicants and lenders operate differently today thanks to the internet. It is easy and fast to find online offers from a variety of lenders. Many times you can find the lenders terms listed. There are comparison sites that will do much of the leg work for you.

In exchange for a slightly higher interest rate, you can get your loan applied for and approved within a few minutes. Be sure that you are not applying for a payday loan when you mean to apply for a longer term loan. Payday loans charge high interest rates and short repayment terms.