When it comes to getting a loan, homeowners are at the top of the list. The benefit comes in two forms: first, you can use your home as security, and second, you have already shown that you have good credit. So, use these benefits to get a much better deal on any loan you might be thinking about.
The home loan is security.
Someone who owns their own home can get a secured loan. This is when the home is used as security for the loan, so that if payments stop for some reason, the lender can take the property. This is a pretty bad case scenario, though, and protections like unemployment insurance can often be taken out along with the loan to give you more peace of mind. In practise, a secured loan gives the lender some assurance that the loan will be paid back, giving them more freedom to decide how much to lend and how it will be paid back. Such a possible loss can also make people more sure than they would be with a normal personal loan that they can meet their obligations. Lenders care a lot about anything that makes it less likely that you won't pay back your loan.
A track record of paying back loans
Homeowners have proof that they can handle the monthly costs of paying back a big loan. This comes in the form of their mortgage and all the insurance and bill payments that come with owning a home. In other words, you are statistically more likely to be a good borrower if you not only meet the mortgage lender's requirements to get a mortgage but also keep a good, steady, and reliable record of making payments.
Again, if the lender has less risk, the consumer often gets a better deal.
Home loans can be a key to getting a loan approved.
Because of this, homeowner loans are a great way to get credit, even for people with bad credit who might not be able to get another kind of loan. But they are really for everyone, and the lender doesn't have to worry about some of the risks that make unsecured loans more expensive.
