Most financial lending institutions offer loan for home owners. These loans take the form of home equity loans, meaning that the owner of the home willingly puts up his/her equity in their home against the amount of money the lender is willing to lend them.
In other words with such loan for home owners, the home becomes collateral for the finance company, credit union or bank. If the owner defaults in their repayments of the loan then the lender can dispose of the home on the open market to regain the amount of money lent.
But do not let this put you off looking into home equity loans. They can offer significant benefits and advantages to the homeowner, such as:
- Money from loan for home owners can be used for any worthwhile purpose. These include home renovation and maintenance, personal uses like travel, buying a car etc, college education, other forms of investment including real estate, investing in a business, consolidation of debt, and cash for financial and medical emergencies and so on.
- Rates of interest with loan for home owners are normally fixed with a level repayment amount month after month for the term of the loan. This means you know exactly what amount of money to budget for each and every month.
- Because the owner’s home is security for the loan, lenders will generally give a lower interest rate than the normal mortgage home loan. This makes loan for home owner’s cheaper forms of credit than other types of finance available.
- If the homeowner has a bad credit rating but has equity in their home they are still able to receive homeowner loans, even though sometimes they can be charged with a higher rate of interest.
- The amount of equity in a home is worked out by looking at the variation between the value of the home at market prices and the amount remaining on the initial home loan. Most lending institutions are looking for at minimum of only 20% equity in the home.
- Loan for home owners is easier and simpler to get than normal mortgage loans. In fact, if a homeowner meets the criteria re: income, credit rating, property values etc, they can even apply for and get a loan approved online or over the phone.
- Loans for homeowners can be applied for not just for private homes, but if equity is held in different types of property such as factories, apartments, commercial properties etc it can be security for similar types of loans as well.