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Unsecured Loans – finance for everybody
As the name implies, unsecured loans don’t require the borrower to pledge any of his assets like home as security against the loan amount borrowed. Instead, the loan is granted viewing the borrower’s credit history and his ability to repay the loan. These loans are also called signature loans or consumer loans. Unsecured loans are multiple loans that can be used for a plethora of purposes. Some of these are mentioned below
The following are the parameters on the basis of which a lender grants unsecured personal loans to the customers.
The credit history of the borrower – This is the most important criterion for judging a borrower. If the borrower has a number of defaults, arrears and miss payments in his credit history, his chances of securing an unsecured personal loan are low. He may, though, get a bad credit unsecured loan at high interest rate. If the credit score of the borrower is above 700 on the scale of 800, he may get an unsecured more comfortably because of his excellent credit record.
The DTI ratio of the borrower – DTI i.e. Debt to consolidation ratio reflects the affordability of the borrower. DTI = Debts/ Income of the borrower. If the DTI is greater than 3.6, the borrower has good chances of getting an unsecured loan.
So, the above cited reasons are the two most important factors that contribute in the lender’s decision in respect to the loan amount, loan tenure and APR to be charged. If the credit history of the borrower is bad but the DTI ratio is good, the borrower may get an unsecured loan. Better the credit score of the borrower, lower his annual percentage rate (APR).
The amount one can borrow as unsecured loans start from as little as £500 and can go up to £25,000. Because the borrower doesn’t secure the money by any collateral, lenders tend to limit the value of unsecured loans to £25,000. The repayment period may stretch from six months to 10 years.
What is Federal Modification Loan
I have been asked so many questions regarding federal modification loan. So, here again is a primer for those who are interested in this.
Federal modification loan for homes are made to help those whose houses are in threat of immediate or gradual foreclosure. These are the people whose mortgage is too big that they are definitely having trouble with the payments if they choose to try to stop foreclosure. In short, these are people who will have to give up an arm and a leg to complete the payment. The emphasis on their financial struggle is an important prerequisite to be eligible for federal modification loan.
The program is called “Making Home Affordable” and it was put into place by President Obama. This is expected to give much neede4d aid to the millions of Americans who need to have their monthly mortgage payments rates to be lowered. The questions that most people ask is: does the program have any catch? Most people also want to know what this program does to your taxes and how exactly does it change the monthly payments.
Generally speaking, refinancing plans will leave your credit score unscathed because it will just revise some of the terms in your mortgage loan. The thing that does scathe your credit score is missed payments. If you missed a payment during the year before, then you will not be eligible for federal modification loan.
I had a friend once who was having some problems regarding this matter. He was a very good friend. He had a great wife. She was still young, just around her late twenties. They had a cute 5 year old girl. The guy had it all until he suddenly lost his job because of the recession. The economic downward spiral hit them hard and it hit them without any warning. They were totally unprepared. This was just a new family so they obviously was far from paying their loans. They bought a really nice home near Henderson Nevada, the spot where the big real estate problem first went bonkers. If not for this federal plan, they would have lost so much. The marriage would in all likelihood not have survived at all. Good thing they were able to take advantage of the government plan. You can too if you are smart enough. You just need to make sure that all the necessary requirements are met.
These things happen. It can happen to just about anybody. Do not give in to despair. Rise up, the government can help you but you need to help yourself first and foremost.