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Wednesday, July 1, 2009

Explaining Different Types of Loan Program

Loans or lending is essential to manage financial shortcomings of an individual. Loans are provided for a certain rate of interest. Home loans are a popular concept these days. This promises citizens to save their taxes, as well as build their dream home. Banks determine the loan amount according to the repaying capacity of the individuals. Mortgage loans require assets for approving the loan. This is more suitable for old people, who have ancestral property but no funds with them. They can use the property, to get some funds. All mortgage plans can be divided into conventional and government loans.

They also can be classified as fixed rate loans, adjustable rate loans and their combinations. The Federal Housing Administration (FHA) administers various mortgage loan programs. FHA loan has lower down payment requirements. It is very easy to qualify them than conventional loans. Us dept of veterans affairs approves the VA loans. It is comparatively easier to get VA loans than conventional loans. It allows veterans to obtain home loans at good terms. Qualification for a VA loan is much easier. There are RHS loan programs which give loans for citizens with minimal closing costs. A loan may be conforming or non-conforming to the guidelines set by Fannie Mae and Freddie Mac.

These guidelines establish the maximum credit limit, loan amount; borrower's income etc. The maximum loan amount varies in different states. The loans above the maximum loan limit are called the jumbo loan. Jumbo loans are bought and sold at a much smaller rate.

There are exclusive loans for small businesses. These loans help the small scale business men to develop their business. Education loan programs provide a helping hand for students in pursuing their dream course. These loans are very easy to get. The repayment of these loans generally begins one year after graduation or after employment of the individuals. The interest rates of these loans are also quite nominal for the students. These loans are given without much security. Home loans are provided based on the annual income of individuals. The conditions for getting a home loan are that the individual must have at least one fourth of the amount of the house with them.

The bank funds the remaining three-fourth. An individual is free to choose repayment period. Home loan also has income tax benefit. Thus it makes an individual to save a lot in their tax amount. Buying a house has been made very simple with these loans. A bank follows lots of conditions while sanctioning loans. It requires a guarantee for the repayment of the loans. A bank usually asks for assets of the individual while sanctioning the loans. Defaulters of the payment have penalties. If an individual cannot pay the amount, the bank may take his assets. Credit cards are another popular lending system which has a very high interest rate. If one fails to pay the credit amount, the interest amount shoots up. The amount can be taken from atm's.

It is rather easy to get the money from credit cards. The bank has conditions on the credit limit of a credit card according to the income of an individual.


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Anonymous said...

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free said...

thanks Grace..