Various Loan Types Available

Various Loan Types Available

Various Loan Types Available
In days gone by one had to​ save to​ acquire a​ home or​ anything of​ value .​
Almost two thirds of​ the​ life was spent in​ cringing and saving to​ buy a​ place of​ one’s own .​
Today the​ situation is​ entirely different .​
Everywhere the​ media is​ loud about fulfilling your dreams with loans of​ various types to​ suit any pocket .​
A loan is​ a​ transaction of​ money from a​ lender to​ a​ borrower for any valid purpose .​
The borrower has to​ pay a​ certain percentage of​ interest periodically,​ and also pay back the​ initial amount over an​ agreed time with some specific terms .​
The lender can be a​ bank,​ a​ government organization or​ any private institution .​
a​ conventional loan is​ a​ loan that is​ not backed by the​ federal government .​
An FHA loan is​ insured by the​ Federal Housing Administration .​
These are limited loans .​
a​ jumbo loan on​ the​ contrary is​ a​ loan that exceeds the​ limits set by the​ Federal National Mortgage Association or​ the​ Federal Home Loan Mortgage Corporation guidelines .​
Loan used for the​ construction of​ a​ home is​ called the​ construction loan .​
This type of​ loan changes into a​ permanent one after the​ home is​ completed .​
Loans can be unsecured or​ secured .​
In the​ unsecured loans the​ risk is​ higher for the​ creditor .​
They assess your income and your repayment capacity and lend you​ the​ amount .​
The monthly installments are higher and the​ duration of​ the​ repayment is​ shorter than secured loans .​
Many companies compete in​ providing these types of​ loans .​
The secured loans are very strict with the​ time .​
They provide loans for almost any reason with an​ asset of​ yours as​ a​ guarantee .​
The risk in​ going for a​ secured loan is​ high for the​ borrower .​
There is​ a​ chance of​ losing the​ asset that can be a​ house,​ important documents or​ any other material of​ value .​

Before going for a​ loan many thing s have to​ be considered .​
You should have a​ very clear picture of​ the​ interest rate,​ the​ type of​ rate,​ the​ terms and conditions,​ the​ down payment .​
Also get information on​ any insurance required by the​ lender,​ any associated fees etcetera .​
You should also have the​ resources to​ repay the​ loans on​ time .​
This will generate a​ good result financially.
Loans should be taken only when absolutely necessary .​
Avoid taking more than one loan at​ a​ time .​
Home loan,​ education loan,​ car loan and loans for starting or​ improving an​ existing business are some examples of​ loans.

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