p> A small home loan is taken out on the equity of your house just like an equity loan or second mortgage. The purpose is for renovating your property for repairs or add-ons. This will usually increase a homes' existing value. If you have enough equity in your house, you may qualify for a low interest loan with a competitive rate. You may also be able to qualify for an unsecured loan if the amount you need is small.
Generally, if you need more than $ 10,000 a second mortgage on the property would be required. The interest on this type of loan could be tax deductible if it is the primary residence of the owner. Compared to other loans, you can usually get a lower interest rate on a small home loan. This is because it is, quite often, seen as less risky when you are increasing the equity in your home. Typically, repayment periods run 10 to 15 years with 15 being the maximum.
When high monthly installments aren't in your budget, you can extend the loan length to make them smaller. If you don't have a good credit history, you may still be able to use your home equity for bad credit financing. Interest rates are typically lower, even with bad credit, when the loan is secured with an asset like a house.
If you own a house, you may qualify for a small home loan. How much equity you have in your house plays a deciding role in the approval process. The more equity you have, the better your chances of being approved are as well as how much you will qualify for. Age also plays a role in the qualification process, as does your current salary. Lenders like to know that you will be able to pay them back, and a younger age means, to them, that you have longer to pay back any loans.
If your credit is good, you may also qualify for small home loan rates and terms comparable to mortgage rates. This can mean lower monthly payments for you. If you are unsure of what your credit score is, you can order a report from any of the major credit bureaus. Bad credit will not necessarily disqualify you from getting a small home loan though. Just as with good credit, enough equity can help those with less than perfect credit obtain home loans with competitive rates and terms. While the rates might be higher than those of good credit borrowers, they are still generally less than some other financing options.
Personal loans, credit cards and store lines of credit can all have considerably higher interest rates. Shopping around for this type of small home loan may yield even lower rates, therefore getting you the best terms for your budget. The less you need to borrow, the lower your rates will be. Longer repayment terms will also yield you a lower interest rate, as well as keeping your monthly payments low.