Homeowners Get Lower Rates Even On Unsecured Loans
It is believed that home owners usually get better rates on secured loans. However, truth is that home owners can get better rates and more advantageous terms even on unsecured loans. These may sound strange but lenders find home ownership to be a very important risk reduction factor and thus homeowners are preferred to non-homeowner applicants.
There are many reasons why lenders prefer homeowners over non-homeowner borrowers. These reasons explain why more and more homeowners apply for unsecured loans when unsecured loans have been the target of tenants and non-home owners for many years. And this also explains why non-homeowners are finding it very difficult to obtain loans with advantageous terms.
Unsecured Loans
Unsecured loans carry no collateral and thats the main reason why they are attractive to most customers. Other than that, the interest rate they charge is higher than secured loans, the loan amount is lower and the repayment programs are shorter. These loans are generally used for unimportant purposes like going on vacations, purchasing home appliances or electronic devices, etc.
Due to their unsecured nature, the loan terms are defined mainly by the applicants credit worthiness and ability to repay the loan. Homeowners may or may not have good credit but truth is that in the event of default, by legal means, the lenders can recover their money through the borrowers assets even if the loan has no collateral.
The only differences between the legal processes where the lender intends to recover his money with secured and unsecured loans are the following: With secured loans, the lender has a particular asset from which to collect that is individualized and will be used first to repay the loan. The legal process is faster and inexpensive.
With unsecured loans, there is no particular asset protecting the loan and the lender will have to share all the applicants assets with the rest of the creditors in order to recover his money. The legal process is significantly slower and the legal costs that the lender will have to face are a lot higher.
Homeownership Implications
What homeownership implies for the lender is of significant importance and determines benefits and advantageous terms for the borrower. The fact that the applicant possesses assets of certain value brings ease to the lender as he knows that in the event of default there are properties from which to collect the money he invested.
Moreover, the fact that the borrower maintains a property implies that he has an income of certain importance and that he is good at administrating. This reduces the risk implied for the lender in the financial transaction. The consequences of this fact are lower interest rates, longer repayment programs, higher loan amounts and consequently lower and more affordable monthly payments.
And that are the reasons why more and more homeowners are resorting to unsecured loans instead of secured loans. They dont run the risk of repossession and get loan terms for unsecured loans similar to the terms they would get for secured loans. However, in the event of default the possibility of loosing the property still exists and loans should only be taken knowing that you are able to repay them.
There are many reasons why lenders prefer homeowners over non-homeowner borrowers. These reasons explain why more and more homeowners apply for unsecured loans when unsecured loans have been the target of tenants and non-home owners for many years. And this also explains why non-homeowners are finding it very difficult to obtain loans with advantageous terms.
Unsecured Loans
Unsecured loans carry no collateral and thats the main reason why they are attractive to most customers. Other than that, the interest rate they charge is higher than secured loans, the loan amount is lower and the repayment programs are shorter. These loans are generally used for unimportant purposes like going on vacations, purchasing home appliances or electronic devices, etc.
Due to their unsecured nature, the loan terms are defined mainly by the applicants credit worthiness and ability to repay the loan. Homeowners may or may not have good credit but truth is that in the event of default, by legal means, the lenders can recover their money through the borrowers assets even if the loan has no collateral.
The only differences between the legal processes where the lender intends to recover his money with secured and unsecured loans are the following: With secured loans, the lender has a particular asset from which to collect that is individualized and will be used first to repay the loan. The legal process is faster and inexpensive.
With unsecured loans, there is no particular asset protecting the loan and the lender will have to share all the applicants assets with the rest of the creditors in order to recover his money. The legal process is significantly slower and the legal costs that the lender will have to face are a lot higher.
Homeownership Implications
What homeownership implies for the lender is of significant importance and determines benefits and advantageous terms for the borrower. The fact that the applicant possesses assets of certain value brings ease to the lender as he knows that in the event of default there are properties from which to collect the money he invested.
Moreover, the fact that the borrower maintains a property implies that he has an income of certain importance and that he is good at administrating. This reduces the risk implied for the lender in the financial transaction. The consequences of this fact are lower interest rates, longer repayment programs, higher loan amounts and consequently lower and more affordable monthly payments.
And that are the reasons why more and more homeowners are resorting to unsecured loans instead of secured loans. They dont run the risk of repossession and get loan terms for unsecured loans similar to the terms they would get for secured loans. However, in the event of default the possibility of loosing the property still exists and loans should only be taken knowing that you are able to repay them.