Anytime I need information with respect to loans and mortgages, I go online. They have made life so much less difficult for all those lesser mortals who find it so tough to understand (so-called) simple notions like redemption penalties, collateral, secured homeowner loans, unsecured loans, and so on. I no longer have to look to friends in the finance field to advise me on what loans to take and what not to. The world being driven by the web these days, everybody has to learn to think for themselves. It was while trying to sift through the financial jargon that passes for English on the web that I found the answers to many of the questions that had been plaguing me. Of course, I had to look through almost a dozen different websites and spend a couple of hours before finally reaching a complete understanding of the words that loan companies try to win over our heart and our business with.
For starters, I have been successful in finding the difference between secured homeowner loans and unsecured loans. Now, secured loans of any kind are usually secured against some asset. In most cases, this asset is a home. On the other hand, unsecured loans need no such security, which is one reason why the time taken to get hold of an unsecured loan is far lesser. After all, you could be giving the name of any property anywhere in the world and stating that it is your own. Obviously, that is not going to work. So, you have to provide a never-ending list of papers to prove to the loan providers, that the property is your own. Quite a few of those that have stakes in real estate resort to secured homeowner loans because, in spite of the paperwork required, such loans are quite simple to get a hold of.
I also learnt what “collateral” meant (also a Tom Cruise movie). “Collateral” basically is the term used to mean “security”. So the house that secures the loan for you, works as your collateral. Suppose you are unable to repay the loan on time, bid a fond farewell to your home of many years.
But for an unsecured loan, it becomes easier to get one if you have a good credit history. People who do not have a history of good credit are usually treated like prodigal sons. They are made to pay a considerably higher rate of interest, getting loans is that much more arduous, and in general, even getting a loan is a task and a half. But now that you have understood some of the notions, you will find it much easier to get that loan.