Category Archives: Auto Loans
FHA 203K Loan Benefits Of FHA Home Improvement Loans
In recent studies, home ownership rates have increased steadily because of the implementation of the FHA home loans. Purchasing homes has been made easier because of this benefit.
Through the years, FHA has assisted Americans to gain their rights in owning the homes that they want. Reasonable mortgage rates for middle class, producing housing for the elderly and those with low income, and financing military housing are only a few examples of what the FHA has done for them.
The whole process begins with the lenders extending the loans to those who normally couldn´t buy a house without their assistance. But of course, these people must meet the FHA requirements before they are given the loans that they are applying for. One requirement they must meet is that they should have a good credit rating.
If they have a bad credit rating, they might have a hard time getting their application approved. If they do get it approved, it might mean that they would have to pay a higher interest rate compared to those who have good credit score.
Also, FHA loans give benefits to those who wish to buy homes but aren´t able to make down payments because they are fresh college graduates, newlyweds, or people who are still trying to complete their education.
There are also some lenders who allow people with negative credit rating to qualify nonetheless. They know that these people are marred by foreclosure or bankruptcy but they are willing to give them a second chance.
The FHA 203k loan is the most popular FHA home loan. There is a fixed rate and this is the most ideal for first time home buyers. It lets the individuals pay up to 97 percent of their total home loan. This means the down payments are regulated on a manageable level and the closing costs are also at a minimum.
The FHA 203k loan is the only loan wherein the total closing costs can be given as gift from a non-profit or government agency that is related to the cost and benefits of the whole company.
However, the guidelines to remember in this whole transaction when dealing with the FHA 203k loan is that there is a minimum income requirement. The individual must qualify for this before he be granted an FHA 203k loan.
The debt ratios may also be specific, depending on the state he is living in. The FHA 203k loan is a great investment because one can purchase the home he´s been wanting.
How to Get Out of an Upside Down Auto Loan
Getting upside down on car loan, sometimes also referred as underwater on car loan means your loan exceeds the current value of your vehicle or in other words you owe more on the loan than you could expect to get by car sale or trade-in deal. As you can’t pay off the loan with the income from selling the car due to the negative equity in auto loan, so you’re stuck with the car and the loan payments.
Of course, nobody likes being upside down on their auto loan whereby the car you want to trade-in is worth $6K and you still owe $10k on it. Despite the fact, almost 40% of the Americans end up being upside down on their auto loans.
Following are the reasons which act against the people to gain equity out of their vehicle while turning them upside down on their loan. However, being upside down can only be problematic to those who are looking to trade-in their car while owing on auto loan.
>>Low down payment or no money down A lot of borrowers avoid making down payment thinking of saving their cash on hand, but it ultimately adds on the interest amount.
>>Longer term Getting a car loan for five years or more can also increase your chances of owe more in interest than you will on the car. Thus, even if your payment seems affordable, in the true sense you are paying a lot more in interest.
>>Rolling old car payment to new car loan Some people with an intention to get rid of this situation transfer their old car’s remaining balance into a new auto loan. And thus add extra debt on their new auto loan which makes them to increase their monthly payments while being upside down all over again.
>>Higher interest rate: While accepting vehicle loan, it may happen that you are forced to take a higher interest rate either due to bad credit or any other reason which leads to raise your payment to interest more than principle.
>>Paying high for car: This happens especially when you buy an automobile from a private seller without checking the blue book value, and end up paying more on your car. While also when you purchase a car you cannot afford.
How to get out of this situation?
Prepayment: Prepayment could be an excellent way to pay off the loan faster. However, you need to make sure that your current loan does not include any prepayment penalties that could restrict you from paying additional cash. Thus, you can make extra payments each month and can get rid from being upside down.
Refinancing upside down car loan: Car loan refinancing can also be a good option to lower the interest rates while redefining your loan terms such as shortening your term period which can help you from being upside down. However, sometimes lenders does not provide you traditional refinance car loan, in such a case you can opt for a home equity loan which is a type of secured loans and have comparatively lower rates. Getting this loan can help you to pay off your loan quickly without spending extra cash.
Avoiding the situation in future:
Making the down payment (at least 20%). Not having loan terms more than 5 years. Prefer buying a used car as new cars depreciate much faster. Keep your car loan payment limited to 20% of your income.