Types of loans in California: An overview
Do you want to take a loan to buy a home or a car in California? Do you want a take a loan to start a business in California? If yes, you need to have some loan information regarding the various types of loan offered in California.
What a loan means
A loan is an amount of money that is given to you by a person or organization, for a limited period of time. According to the terms and conditions of the loan agreement, you need to repay the lender along with the interest charged, after a certain time frame.
Types of loan
Depending on your needs and eligibility criteria, you need to select the right type of loan for you. The major types of loans are:
* Home loan: If you need to take a loan to buy a home for yourself, you should take advantage of home mortgage loan. Californian lenders offer a variety of mortgage loans. Depending upon the terms and conditions of the loans, you can select any type from, fixed rate mortgage, adjustable-rate mortgage, home equity lines of credit (HELOC), home equity loans, etc.
You should take the loan depending upon your current financial condition and your affordability to repay. The lenders will take into account factors like, your credit score, monthly income, existing debt amount, etc, to approve your loan application.
* Auto loan: You can opt to take an auto loan to buy a car, which can be a new or a used one. You need to have a good credit history to get the loan. The lender will also consider your income to get you approved for a new car loan. You have to provide them with your pay stubs, bank account statements, W-2s, etc. He will also analyze your current debt situation.
* Business loan: You can take a business loan to start a new business or to enhance your current business.
* FHA loan: You can opt to take FHA loan, if you want to have lower interest rate and lower down payment. The Californian licensed lending companies will provide closing cost assistance to you. You may get rebates upto 1.5% of the home price for closing cost assistance.
* Payday loan: If you are in need of some emergency cash, you can take advantage of Californian payday loan. This is a short term loan, given against your pay check of the next month. You need to submit proof of your regular income and bank account statements, to get approved for the loan.
* Construction loan: If you want to get funds to finance the building cost of your home, you can take advantage of this loan. Construction loans are generally short term loans. The various types of construction loans are:
Owner builder loan: If you want to build your own home as a contractor, you can take this loan.
One time close loan: Instead of traditional construction loan, you can combine multiple loans into a single application and closing.
Spec loan: If you intend to sell your home after construction, you can take this loan. Your experience as a builder, marketing plan and income of your building business generating profit, will be considered in approving the loan application.
Land lot loan: You can take this loan if you want to purchase or refinance a land.
* Hard money loan: You can apply to the private investors to get hard money loan to fund for your projects. This type does not conform to the same requirements as that of a traditional loan.
These are short term loans. You have the option of paying only interest on the loan and at the end of the loan term, can repay the outstanding amount by balloon payment. In California, to get a hard money loan, you need to have 25%-30% equity in land or in liquid assets as collateral.
You can get a variety of loan types in California. You need to know the detailed loan information regarding terms and conditions of each type and choose the one which best suits your needs.