AVAILABILITY OF SECURED LOANS

Secured loans readily available through banks, mortgage companies, and other lending institutions because there is a guarantee from loss when the borrower has put his home, auto, or pay check on the line as security. Home or business lending is the largest and most popular of secured lending in our society. Virtually every American wants to own his or her own home, and many people buy property for a company as well. There are many secured loan options available for a prospective homeowner. If a military veteran is seeking to borrow, the Veterans Administration (VA) will help with a low interest mortgage. Federal Housing Authority (FHA) lending is available, and conventional lending, where a substantial down payment gets a borrower on track toward home ownership. Until it's paid for, the home is owned by the bank or mortgage company. Every buyer looks forward to the day the title is finally handed over to him/her when the note is paid in full.

It is possible to use the same security for more than one loan, as when a homebuyer or business owner gets a second mortgage on the property. Then the equity in the property is the security for the amount. These kinds of secured loans give homeowners the needed resources for consolidating other debts, and paying them off with a lower interest rate than each separate bill had required. Or perhaps the homeowner needs to add on or make revisions to the basic house plan with the equity option. A child needing tuition funds is another common reason for an equity secured loan. The only drawback with these secured loans is the possible loss of revenue if something were to happen so the borrower had to sell the house before the debts where cleared. Second mortgages have to be paid out of the funds from the house sale, reducing the amount realized from the sale.

When buying a car, and after agreeing to a price and terms, the bank or finance company holds the title to the automobile until the last payment is made on this secured loan, and that may be somewhere between one and five years. Although ownership remains with the financial institution until the purchase price is paid in full, this type of borrowing allows the buyer full use of the house or car while payments are being made. There are other items purchased under the contract such as home appliances, shop tools, or farm equipment. With all these secured loans, there is recourse if payments are not made -- there is a product that can be repossessed, so borrowers need to commit to paying back their debt.