What Is A Consumer Loan?

A consumer loan is a loan or line of credit that you receive from a lender.

Consumer loans can be auto loans, home mortgages, student loans, credit cards, equity loans, refinance loans, and personal loans.

This article will address each type of consumer loans.

Get Approved for personal loan today.

Types of consumer loans:

Consumer loans are divided into several kinds of categories. They include auto loans, student loans, home loans, personal loans and credit cards. Regardless of type, consumer loans have one thing in common: you have to repay the loan at some period of time. 

Auto loans

Most people who are thinking of buying a car will apply for an auto loan. That is because buying a car is expensive.

In fact, it is the second largest expense you will ever make besides buying a house. And unless you intend to buy it with all cash, you will need a car loan.

So, car loans allow consumers to purchase a vehicle where they may not have the money upfront. With an auto loan, your payment is broken into smaller repayments that you will make over time every month.

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You can choose between a fixed or variable interest rate loan. But the most important thing is, whether you’re buying a new or used car, it’s important to compare loans to help you find the right auto loan for your needs.

Start comparing auto loans now!

Home loans

Another, and most common, type of consumer loans are home loans. A home loan or mortgage is a loan a consumer receives for the purpose of buying a house.

Buying a house is, undoubtedly, the biggest expense you’ll ever make in your life. So, for the majority of consumers who want to purchase a house, they will need to borrow the money from a lender.

Home loans are paid back over a period of time. Those mortgages term are typically 15 to 30 years. They can be variable rate or fixed rate. A fixed rate means that your repayments are locked in for a fixed term.

Whereas a variable rate means that your repayments depend on the interest rate going up or down when the Federal Reserve changes the rate.

Over the loan’s term, you will pay back the principle amount of the loan plus interest. This makes it very important to compare home loans. Doing so allows you to save thousands of dollars on interest and fees.

Personal Loans

The most common types of consumer loans are personal loans. That is because a personal loan can be used for a lot of things.

A personal loan allows a consumer to borrow a sum of money. The borrower agrees to repay the loan (plus interest) in installments over a period of time.

A personal loan is usually for a lower amount than a home loan or even an auto loan. People usually ask for $500 to $20,000 or more.

A personal loan can be secured (the consumer backs it with his or her personal assets) or unsecured (the consumer does not have to use his or her personal asset).

But most of them are unsecured, so getting approved for one will depend on your credit score, income and other factors.

But consumers use personal loans for different purposes. People take out personal loans to consolidate debts, such as credit card debts. You can use personal loans for a wedding, a holiday, to renovate your home, to buy a flt screen TV, etc…

Student Loans

Consumers use these types of loans to finance their education. There are two types of student loans: federal and private. The federal government funds a federal student loan.

Whereas, a private entity funds a private student loan. Generally, federal student loans are better because they come at a lower interest rate.

Credit Cards

Believe it or not credit cards is a type of consumer loans and they are very common. Consumers use this type of loan to finance every day expenses with the promise of paying back the money with interest.

Unlike other loans, however, every time your pay with your credit card, you take a personal loan.

Credit cards usually carry a higher interest rate than the other loans. But you can avoid these interests if you pay your balance in full immediately.

Small Business Loans

Another type of consumer loans are small business loans. These loans are used specifically to create a business or to expand an already established business.

Banks and the Small Business Administration (SBA) usually provide these loans. Small Business Loans are different than personal loans, because you usually have to provide a collateral to get the loan.

The collateral serves as a way to protect the lender in case you default on the loan. In addition, you will also need to provide a business plan for the lenders to review.

Home Equity Loans

If you have your own home, you can borrow money against it. These types of consumer loans are called home equity loans. If you’ve paid off the mortgage on the home, you can borrow up to the full value of the home.

Vice versa, if you’ve paid half of the mortgage on the home, you can borrow half of the value of the house. You can use a home equity loan for several purposes like you would with a personal loan.

But most consumers use this type of loan to renovate their house.  One disadvantage of this type of loan, however, is that you can lose your house in case of a default, because your house is used as a collateral for the loan.

Refinance loan

Loan refinancing is a basically taking a new loan to replace an existing one. But you get this loan specifically either to refinance your existing mortgage or to refinance your student loans or a personal loan.

Consumers usually refinance in order to receive a lower interest rate or to reduce the amount of monthly payments they are making on their existing loans.

However, reducing to a lower payment will lengthen the time to pay off the loan and you will accrue interest as a result.

Consumers also use this type of loan to pay their existing loans off faster. However, some mortgage refinancing loans come with prepayment penalties. So do you research in order to avoid that extra charge.

The bottom line is consumer loans can help you with your goals. However, understanding different loan types is important so that you can choose the best one that fits your particular situation.

So do you need a consumer loan?

Get Approved for personal loan today.

Speak with the Right Financial Advisor

If you have questions about your finances, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post What Is A Consumer Loan? appeared first on GrowthRapidly.

Source: growthrapidly.com

Newly Renovated, a Midcentury Modern in Berkeley Sells for $4.37M

Berkeley MCMChristian Klugmann

A remodeled midcentury modern home in Berkeley, CA, has quickly sold for $4.37 million.

It first came on the market in early October 2020 for $4.35 million, but the sellers trimmed the price to $4,295,000 later in the month. Two months after that, the home wound up selling for over asking price, at $4.37 million. The property was one of the most expensive listings in the college town.

The residence stood out in other ways, which inspired a buyer to move in with a higher offer.

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The sparkling renovation by the sellers updated the 53-year-old home for the needs of the 21st century. The sellers picked up the home in 2015 for $2.45 million. It was designed in 1967 by Gerald McCue, then chairman of the University of California Berkeley’s Architecture School, who went on to become dean of Harvard’s Graduate School of Design.

McCue built the residence for himself and his family. Over a half-century later, the home underwent another update to reflect the needs of a new family.

While retaining the spirit of the original design, the interiors were done anew. The loftlike living space measures 3,844 square feet and offers four bedrooms and 3.5 bathrooms.

The open layout features walls of glass and a living and dining space that extends to a deck outdoors. The eat-in kitchen features clerestory windows, modern appliances, white counters, and contrasting blue cabinets.

Highlights include 13-foot ceilings and giant windows in every room, which offer San Francisco Bay views as well as an enviable indoor-outdoor flow.

Although the home features an open plan, it also offers a useful separation of space, with two offices and additional living areas that allow for a family or media room, an exercise room, and guest or children’s bedrooms.

Outdoors, the grounds in the Berkeley hills, on a flat lot in a woodland setting, feature “serene yet practical landscaping,” a garden, and living and dining space.

The “rare find” is also near North Berkeley gourmet shops and restaurants, and not far from the UC Berkeley campus.

Ann Arriola Plant and Lynn Signorelli of Red Oak Realty represented the seller. Elizabeth Behrens with the Grubb Co. represented the buyer.

The post Newly Renovated, a Midcentury Modern in Berkeley Sells for $4.37M appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

VA Cash-Out Refinance: Is It a Good Idea? | Rates & Guidelines 2021

The VA cash-out refinance program enables veterans and active-duty service members to tap into their home’s equity and, depending on current refinance interest rates, lower their interest rate at the same time.

The idea of getting cash out of your home is appealing, but is it a good idea for you? Below, we’ll dive into some of the situations when a VA cash-out refinance might be a good fit — and when it might not.

Check your eligibility for a VA cash-out refinance loan today.

Reasons veterans get a VA cash-out refinance

Veterans use the VA cash-out refinance for plenty of reasons — the biggest being that they want to get cash. The cash comes from home equity. So, if you have a mortgage for $200,000 and you’ve paid off $50,000, you can get up to $50,000 back in cash, while also potentially lowering your mortgage rate.

Veterans aren’t required to take out the full amount possible, though. A homeowner in the same situation could take out $10,000 to fund a small kitchen remodel, to buy a new car, or pay for a vacation, for example.

The most common reasons to get cash from a cash-out refinance is to fund remodels, renovations, and repairs to your home — or to use the cash to pay off other debts. (It may be financially responsible to use a cash-out refinance to pay off credit card debt if the rate on the other debt is significantly higher than the new rate you’ll get from a cash-out refinance.)

But, there are other potential benefits to a VA cash-out refinance. You may be able to lower your interest rate and monthly mortgage payment. And, if you have an FHA or conventional loan with mortgage insurance, you could remove that extra monthly cost by refinancing into a VA loan.

Reasons to avoid a cash-out refinance

While it’s a good decision for many homeowners, refinancing isn’t the best option for everyone. You should only refinance if you can gain something from the new loan. When determining whether you’re benefitting from a cash-out refinance, it’s important to consider your whole financial situation and your goals.

It could increase your mortgage rate.

When veterans apply for a VA cash-out refinance, they’ll need to supply their credit score. If your credit score is lower than it was when you first applied for your mortgage, then there’s a good chance that the refinance could increase your mortgage rate.

The clock restarts on your mortgage.

It’s also important to remember that a cash-out refinance restarts the clock on your mortgage — you’re opening up a new loan with new terms, likely 30-years. This means additional interest costs. Because of this, it’s best to use a VA cash-out refinance for things that will improve your financial situation, and, in turn, improve your ability to repay the loan.

Riskier than other loan types.

VA cash-out finances are often used for home improvements that increase the overall value of the investment, education expenses to increase earning potential, new business ventures, or debt consolidation. Still, all of these options can represent a financial risk. Before proceeding with a cash-out refinance, it’s worth investigating other funding options such as personal loans, specialized loans (like student loans or small business loans) or second mortgages.

Finally, if you’re using cash from a VA cash-out refinance to pay off credit card debt, it’s important to remember that you’re paying off unsecured debt with secured debt — in other words, you risk foreclosure on your home if you are unable to make your mortgage payments for any reason.

VA cash-out refinance rates

VA cash-out refinance rates are currently low. According to Ellie Mae’s Ocober 2020 Origination Report, interest rates for VA loans hovered at an average of 2.75% — 0.26% lower than interest rates for 30-year, fixed-rate conventional loans.

Read more: Current VA Refinance Rates

With rates projected to remain low, Veterans who purchased a home within the last few years should check to see if a refinance could reduce their interest rate and monthly mortgage payment. Your potential savings are dependent on your unique situation — remember to comparison shop with multiple lenders to see who can offer you the best deal.

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When a VA streamline refinance is right instead

If you don’t need cash, there’s no reason to get a cash-out refinance. In these situations, a VA streamline refinance (also known as an interest rate reduction refinance loan or IRRRL) makes more sense. The rates associated with the IRRRL tend to be lower, so you could save more money with that type of refinance.

If you’re looking to take out cash for energy-efficiency improvements to your home, the IRRRL allows homeowners to finance up to $6,000 in improvements that will save money over time, including programmable thermostats, insulation, solar heating, and caulking/weather stripping.

VA streamline refinance vs. VA cash-out refinance

If you’re looking to lower your interest rate and monthly payment, don’t need cash out and already have a VA loan, an IRRRL is the easier, quicker, and just plain better option. In fact, streamline refinances require that Veterans lower their mortgage rate to qualify for the loan (also called a net tangible benefit). That’s not a requirement with the cash-out refinance.

If you are looking to get cash for an expense like a remodel or debt consolidation, then a VA cash-out loan is likely the better option. It’s also a good option for Veterans with a non-VA loan requiring mortgage insurance. VA loans don’t require mortgage insurance, so refinancing into one, could remove that monthly expense.

How to apply for a VA cash-out refinance

The application and approval process for a VA cash-out refinance is very similar to the loan application process for a home purchase, including:

  • You’ll likely need a VA appraisal, especially if your existing loan is a non-VA loan. This establishes the current value of your home and helps determine the amount of cash you can take out.
  • You’ll need a credit check and income verification to verify that you’re able to make the new VA loan payments.
  • You’ll need to establish eligibility with minimum service requirements, especially if you currently have a non-VA loan.

Also, shop around with multiple lenders to compare rates and terms. This can save you lots of money over the life of the loan and allow you to negotiate better terms.

Check your eligibility for a VA cash-out refinance loan today.

Source: militaryvaloan.com

Advantages And Disadvantages of Money Market Accounts

Saving money in a place like a money market account can assure that the money will be there safely when you need it. A money market account is an alternative to savings account, and usually pays more interest rate than a savings account.

See, Money Market Vs. Savings Accounts: What’s The Difference.

Overall, money market accounts are worth it, especially if you’re saving for a short-term goal. However, like any investments, there are some disadvantages to money market accounts. 

In this article we will address three main things: what is a money market account and what are the advantages and disadvantages of money market accounts.

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CIT Bank Money Market 1.00% APY Review
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What is a money market account?

Before we get to the advantages and disadvantages of money market accounts, it’s best to define what a money market account is.

A money market account is an interest bearing account that you can open at a bank or credit union. It is more like a savings account, though there are some key differences.

Money Market Accounts Advantages and Disadvantages.

Advantages

Let us consider the advantages of money market accounts.

Interest rate: The main benefit of a money market account is that the interest rate is much higher than that of a regular savings account. For example, CIT bank offers a money market account with 1.00% APY. Whereas the interest rate for a typical savings account is anywhere around 0.10%. MMAs interest rates are similar to those of certificate of deposits. The main difference, however, with a CD you earn a fixed interest for a fixed amount of time. And CD rates are higher than MMAs. And a penalty may apply if you withdraw your money early.

FDIC Insured. One of the benefits of money market accounts is that they are FDIC insured. Your money is secured by the federal government of up to $250,000. If you have more money than that, then you will need to open another account so all of your money can be protected.

To recap, money market accounts are FDIC insured, they offer higher interest rates than savings accounts, and they permit check writing privileges. Despite these many advantages, money markets also have disadvantages.

What are the disadvantages of a money market account?

Minimum balance: Most money market accounts require a minimum deposit account of $1,000. Although, that’s not a big amount, it may not be feasible for a young saver. Plus, a penalty will apply if your balance falls below the minimum requirement.

Limited check writing: While MMAs offer check writing privileges, there is a limit. With a money market account, you can only write six checks per month against your balance, which can be a disadvantage if you pay a lot of bills every month. So, money market accounts are a disadvantage for those who need to write more than six checks per month. 

Account fees: Another disadvantage of money market accounts is the fee. If you don’t maintain the required minimum balance, a fee will apply. So, maintaining the minimum balance is important because any fee will eat out your interest or earnings.

Taxes: Taxes are another disadvantage of money market accounts. You will pay taxes on whatever interest you earn in a MMA.

Inflation: just like taxes and account fees can reduce your interest, inflation can do the same thing. Let’s suppose you generate a 3% return on your money market account per year, and the inflation is 4%. That can impact your total return significantly.

Best Money Market Accounts

CIT Bank Money Market Account

The CIT Bank money market account is one of the best ones out there. Currently, the money market account offers a 1.0% APY.

This is very competitive comparing to other MMAs.  Moreover, CIT Bank’s MMA has a required account minimum of only $100.

Open a CIT Bank Money Market Account.

Bottom line:

While money market accounts offer several benefits, there are disadvantages as well. The main disadvantages are that the minimum balance can be high for a young investor. Moreover, taxes and account fees can eat away whatever interest you might earn. 

Related: 

  • 7 Best Short-Term Bonds to Buy in 2020
  • Vanguard CD Rates: How Much Can You Earn
  • Grow Your Money: Mutual Funds & CDs

Speak with the Right Financial Advisor

  • If you have questions about your finances, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).
  • Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
*TOP CIT BANK PROMOTIONS*
PROMOTIONAL LINK OFFER REVIEW
CIT Bank Money Market 1.00% APY Review
CIT Bank Savings Builder 0.95% APY Review
CIT Bank CDs 0.75% APY 1 Year CD Term Review
CIT Bank No Penalty CD 0.75% APY Review

The post Advantages And Disadvantages of Money Market Accounts appeared first on GrowthRapidly.

Source: growthrapidly.com