Blogging Heros
Almost every homeowner in the US currently has a mortgage. That’s 62% of the American population with a loan that will likely last 30 years.
With skyrocketing home prices, it’s near impossible for people to buy a house with cash. And thanks to home loans, Americans have become very familiar with loans in general. And there are many other types of loans that Americans commonly take on.
Maybe you aren’t in the market for a new home. But there’s likely something that you need to pay for, but don’t have the cash available for.
There are countless different personal loans and business loans available to help you meet your needs. Keep reading to learn about the best loans currently available.
Home Loans
Because most Americans prefer to own a house, this is a loan that most Americans have. But in 2022, not everyone qualifies for a conventional mortgage. The financial industry has created tons of different loan options for those buying a home.
Traditional Mortgage
Traditional or conventional mortgages are the standard product available to homeowners. They are the most common and offer some of the best interest rates.
In the past, a conventional mortgage meant paying 20% down. But these days, you can qualify for a conventional mortgage putting as little as 5% or 10% down, making them more accessible.
They do have strict borrower requirements, however, which means they aren’t an option for every type of borrower.
FHA Loan
FHA loans are perfect for first-time homebuyers, but they aren’t limited to first-timers. They are intended for those with lower credit scores and less cash in hand.
With an FHA loan, you can buy a house with just 3.5% down. It’s the most accessible mortgage for new borrowers who aren’t selling an existing home, and thus, don’t have a ton of capital.
VA Loan
Those who have served in the military or are currently serving may qualify for a VA loan. This is the only loan option that allows for a 0% down payment, backed by the VA.
Interest rates are low as well. And much of the closing costs can likely be rolled into the loan, making it possible to get into a house for very little money down.
For young individuals wondering which career path to take, the military not only provides access to buying a home, but you can also get the cost of higher education covered, setting you up for a life of success after service.
Construction Loan
If you dream of building your own house, designed to your specifications and on a plot of land that you long to live on, you can get a construction mortgage.
There are different types available. Some will finance both the purchase of the land, the construction costs, and the long-term servicing of the loan. Others will pay for just the construction with the intention of the loan being refinanced after its built.
This type of loan is a construction SPEC loan. They are usually utilized by home builders and developers to build a new house with the goal of selling it once it’s built.
Home Equity Loan
Once you have a home, you have a few loan options available to you. A home equity loan allows you to borrow against your current equity in your home.
So if you have a home worth $300,000 and your current mortgage is $150,000, then you own 50% of the equity in your home. You can take out a home equity loan against that equity to put your capital to work.
The benefit is a low-interest rate since the loan is secured. And you don’t have to refinance your existing mortgage, which can be costly.
HELOC
HELOCs, or home equity lines of credit, are similar to a home equity loan. But rather than a lump sum payment, you get a revolving line of credit, similar to a credit card.
These are ideal for those looking to access their equity but don’t need to spend it all right away. They can spend it when they need it, and pay it back when they are able to.
Personal Loans
Personal loans are available to individuals looking to borrow money for something other than a house. They can use the loan for anything they want, such as home upgrades, a vacation, paying off high-interest credit cars, or anything else.
These are usually unsecured loans, so no collateral is required. The tradeoff is a higher interest rate since it’s a higher risk for the lender. If you use these the right way, they can be a solid strategy to maximize your personal finances.
Auto Loans
Another common loan for Americans is the auto loan. While many people can afford to purchase a car with cash, most cannot. So they take out an auto loan, putting between 5% and 10% down for a new or used car.
Interest rates can be pretty low. The only issue is that the value of your car drops as soon as you leave the car lot.
Recreational Loans
These are basically the same as auto loans. But you can get a loan on a boat, an RV, a motorcycle, or some other type of toy or utility vehicle. They generally have the same payoff schedule between three and serve years.
Student Loans
Most students who go to college will take out student loans to pay for their education. These loans usually have very low-interest rates. And they can even finance the cost of housing and school materials, not just tuition.
Debt Consolidation Loans
There are also loans available to help people consolidate, or combine, various loans into one. If you have a personal loan, a credit card, a medical bill, and an auto loan, you might opt to get a debt-consolidation loan.
This loan pays off each of those loans and combines them into this one loan, with one payment, and one interest rate making it easier to manage.
Choosing the Best Types of Loans
Loans are available for nearly every type of borrower to help them with anything they need. If you’re struggling with cash flow and savings, a loan can help you access a home, a car, or something else today, rather than in a few years.
Just use these types of loans wisely and don’t open too many.
Looking for more information like this? Visit our blog now to keep reading.
