If you live in the Jacksonville, FL area and are in the market for a home loan you will be offered a variety of choices from your loan officer. In order to choose the best one for you understanding the different types of loans is imperative. Here are the seven most common types of loans and what they offer.
With a secured loan you have personal property that you used as collateral to obtain the loan. The property that you leverage is transferred to the lender if you ever default on the loan. Types of personal property that can be used typically include homes, vehicles and savings accounts. Interest rates and loan amounts can vary with secured loans. Depending on the value of the property you have for leverage you will possibly be able to get a larger loan. However additional factors such as credit history and length of loan will be considered as well.
And unsecured loan is not back by any type of collateral. Your credit history and income determine your interest rate and the size of your long. Unsecured loans are best if you have a high income, great credit and a solid change that word payback plan.
Conventional loan is a mortgage loan from a mortgage lending business. This type of loan is not backed by a government agency. You can apply for a conventional loan that is either conforming or non-conforming.
I conforming loan is set by the guidelines of Fannie Mae and Freddie Mac. The maximum loan amount is the main guideline. Depending on the homes location the maximum amount can vary. In a higher income area a home can be eligible for a larger loan then one in a general or lower income area. You will need to qualify for this loan based on your debt to income ratio, loan-to-value ratio and your credit history.
Basically, non-conforming loans do not conform to the qualifications set by Fannie Mae and Freddie Mac. If you are looking for a large loan then you will most likely need a non-conforming loan. A good example of a typical example of a non-conforming loan is a jumbo loan.
If you are looking for a loan that has a fixed in a limit line of credit that can then be borrowed from after has been repaid then and open loan would be the right one for you. And open ended loan works best for home renovation projects. An example of an open ended loan is a home equity line of credit. You get approved for certain amount of credit based on the percentage of your appraisal value minus the balance that is owed on your mortgage. This loan is a credit line that you are able to borrow from, repay and borrow from again.
Mortgage loans, student loans and car loans are all close ended loans. These types of loans cannot be borrowed from again and the loan amount decreases each time you make a payment. You if you need a specific amount of money and never anymore then a close ended loan the best way of doing so.
When you set out to find a loan you will be given a variety of options. Knowing the details of each type of loan will help you narrow down and choose what is best for you. The experts at Florida Real Estate Lending will be able to offer you many loan options and help you find the best one for you and your needs.