How to select a best LoanGetting a loan is not that hard as long it may seem. However it requires awareness of your requirements, your current creditworthiness, and most important what type of loan is right for you.
The loan products come in varieties offered by Banks, Brokers, Credit Card companies and private merchants. The popular loans are Auto, Mortgage, Personal, Business etc. These loans come with various type repayment plans.
Mortgage Loan types
- 30 year Fixed Mortgage: The salient feature of 30 year mortgage is that interest rate and your monthly payments remain fixed for the length of mortgage term.
Good for homeowners planning to live longer in house as they don't have to worry about the rising interest rates or market conditions as long they are comfortable with monthly payments. One of the popular mortgage product. The
The good point is homeowners don't have to worry about rising interest rates which happens time to time as market conditions change.
The bad part is when interest rate goes drastically down the only option to avail low interest rate is through refinancing.
- 15 year Mortgage: The 15 year or 10 year fixed mortgage is same as 30 year mortgage. The difference is in higher monthly payment. You may get cheaper rate as compared to 30 year but your monthly payment will be high due short mortgage term.
- This type of loan is suitable to homeowners who have strong financial position and buy homes with good down payment to reduce there monthly payments.
- 1/3/5/7 year arm Mortgage: This loan is suitable for homeowners who either are interested in holding home for few years and then selling for profit or investors, which prefer this type of loan because it helps them flip home for profit at lower monthly mortgage payments.
- Good part definitely is lower interest rate and lower monthly payments but the catch is after the first few fixed years the interest rate is reset to prevailing market interest rate.
- For example on a 3/1 ARM the initial interest rate may be 2.8 apr, the rate gets reset to new interest rate after the completion of third year.
- There is help for consumers, the interest rate can't jump more than 2 present, rest it has to go with current market index rate.
Understand Mortgage loan program
The FHA loan program - Read more at Federal Housing Loan (FHA)
Bankrate provides more detailed information on Mortgage loans. Read more at Bankrate
Wellsfargo bank provides various type of Mortgage loan programs. Read more at Wellsfargo
More from Bank of America Mortgage loan programs. Read more at Bank of America
Auto Loan TypeThe Auto loan is secured loan, which means it serves as collateral on the loan provided by lender. In case customer is unable to make payments and defaults on loan, the lender can seize it as payment. The car loans are available for both new and used cars. Getting car loans is easy as car dealers compete with each other to win over the customers. However people with bad credit and low credit soccer end with higher interest rates being charged on loan.
- Bank Auto Loan: The banks are the first choice and also first quickly available option. Customers either directly can work with there choice of banks or can work with Car dealers bank.
- Trade union Auto Loan: The loans from trade unions is usually very competitive and lower than bank or private lender rates. The only condition is one has to be member of that organization to take advantage.
- Car Dealer Loan: In case you are not able to finance your loan through banks or through the credit unions, the car dealers will hook you up with private lenders to finance your new or used car. The catch is high interest rate to take advantage of your situation.
Understand Auto loan program
Auto loan program for Military families - Navy Federal
Auto loan from BankRate company - Read more at Bankrate
Auto loan from Bank of America - Read more at Bank of America
Student Loan Types:Student loans are available through Federal government, state government , private lenders and through the non profit charities. Each type of student loan requires a set of requirement and a repayment plan. The loans available through charities are free and usually they are available if you have been supporting a cause which that charity supports.
- Federal Student Loan (Stafford) : The Stafford loan is distributed by Federal government to undergraduate or graduate students opting for 4 year or masters program. The Stafford student loan is very affordable loan and comes with a fixed interest rate.
The Stafford loan is provided under two forms (Unsubsidized and Subsidized). The difference is in loan limit per year and the way interest is paid during the time student is in school. The Federal Government will pay the interest for subsidized loan till the time student is in school. For unsubsidized loan interest payments get consolidated with original loan amount.
- Federal Student Loan (Perkins) : The Perkins loan is also distributed by Federal government to undergraduate and post graduate students. This loan is available to families with exceptional financial needs.
The loan has limited availability hence students should submit applications early. Additionally, students should check with there colleges if they participate in federal Perkins loan program.
- Private Student Loan: The private lenders let you take large student loans but with higher interest rates and some of them are rigid in loan repayment terms. Private lenders will check your credit history to make a decision on your loan request.