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Secured Loans can be Valuable
A secured loan can be a valuable thing, especially if you have some extra expenses or repairs that need to be made. A secured loan is different from a HELOC or home equity line of credit in that a loan is a set amount of money paid upon closing while a HELOC is a line of credit that is much like a credit card in that you only use as much as you need.
A secured loan is a loan based on the value of your home. Lenders each have their own way of determining your homes value, sometimes they do a desk appraisal and sometimes they will actually send an appraiser out to do a physical inspection or at least drive-by inspection.
How much can I borrow with a secured loan?
Typically you can borrow up to 85% of your home's value with a home equity loan. The exact figure depends on your credit history, equity and a number of other factors. Regardless of the percentage, the typical home equity loan is for $50,000 or more.
Be sure to avoid any tempting offers for secured loans that have balloon payments. This means that you would be paying interest every month and a large sum would be due at the end of the term. The monthly payments on this type of home equity loan is tempting to say the very least, but consider your options carefully so you don't end up putting your house on the line.
Look out for secured loans that have prepayment penalties. You may run into some money before the term is up and want to pay off your loan. Make sure you are able to without a penalty. Sometimes lenders stick a clause in your loan that really sticks it to you. It shouldn't cost you more money to pay off your loan early, you should be saving money by doing so.