{"id":1284,"date":"2019-03-15T03:19:07","date_gmt":"2019-03-15T03:19:07","guid":{"rendered":"http:\/\/box5773.temp.domains\/~debbiey7\/?p=1284"},"modified":"2020-09-02T11:32:24","modified_gmt":"2020-09-02T11:32:24","slug":"home-loan","status":"publish","type":"post","link":"http:\/\/box5773.temp.domains\/~debbiey7\/home-loan\/","title":{"rendered":"How A Home Loan Works"},"content":{"rendered":"
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\"\"When you borrow money, it\u2019s important to know how loans work<\/strong>. With a better understanding of loans, you can save money and make better decisions about debt, including when to avoid it. Learn how loans work before you start borrowing.<\/p>\n<\/div>\n

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The Cost of Money<\/strong> <\/span><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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What does it take to get money? When you borrow, you have to pay back the amount you borrowed plus interest, of course. You may also have to pay fees.<\/p>\n<\/div>\n

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Costs are a key part of understanding how loans work and which one to choose; in general, it\u2019s best to minimize costs, but costs are not always easy to understand. Lenders don’t often show exactly how loans work and what they cost, so it pays to run the numbers yourself.<\/p>\n

For most loans, a basic Loan Amortization Calculator (see sidebar) will illustrate how things work. If you really want to play with the numbers, use a spreadsheet to see what happens when you change the variables. Costs can be tricky, so be sure to consider interest rates and transaction fees as you study how a loan works.<\/p>\n

Paying Down the Loan Balance<\/strong><\/h3>\n

It\u2019s only a loan if you repay it. As you figure out how loans work, you\u2019ll see that most loans get paid off gradually over time. Each monthly payment is split into two parts: a portion of it repays the loan balance, and a portion of it is your interest cost. An amortization table shows how this works, and how interest costs go down over time.<\/p>\n

A loan may or may not have a “term,” a length of time over which you repay it. Some mortgages last for 30 years, while other loans may only last 3 years. Credit cards are “revolving” loans, meaning you can borrow and repay as many times as you want without applying for a new loan. The term affects how your loan works; shorter terms require larger payments.<\/p>\n

Qualifying for a Loan\"\"<\/strong><\/h3>\n
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To get a loan you\u2019ll have to qualify. Lenders only make loans when they think they\u2019ll be repaid. Your credit is important in helping you qualify since it shows how you\u2019ve used loans in the past. Good credit means you\u2019re more likely to get a loan at a reasonable rate. You may also need to show that you have enough income to repay the loan.<\/p>\n<\/div>\n

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If you don\u2019t have strong credit or if you\u2019re borrowing a lot of money, you may also have to secure the loan with collateral. This allows the lender to take something and sell it if you\u2019re unable to repay the loan. You might even have to have somebody with good credit co-sign the loan, which means they\u2019ll promise to repay it if you can\u2019t. Sometimes a well-written letter can help.<\/p>\n

How Loans Work in Practice<\/strong><\/h3>\n

Now you know more about borrowing in general, but how do loans work in everyday life? When you want to borrow, you visit with a lender and apply for a loan. Your bank or credit union is a good place to start; you can also work with specialized lenders like mortgage brokers and peer to peer lending services.<\/p>\n

After you provide information about yourself, the lender will evaluate your application and decide whether or not to make the loan. If you\u2019re approved, the lender will send funds to you (or it may go directly to another person; somebody you\u2019re buying a house from, for example). Shortly after funding, you\u2019ll start to repay, usually monthly.<\/p>\n

If you want to save money, you can generally repay loans early. Figure out how your loan works to see if there\u2019s any cost to prepay and make sure it makes sense before doing so.<\/p>\n

For more detailed information about the entire home loan process, click Loan Approved<\/strong>\"\"<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div> <\/div>\n<\/div>\n\n\t <\/div>\n\t \t<\/div>\n\t\t <\/div>\n\t \n\t<\/div>\n\t\n\t<\/div>\n\n","protected":false},"excerpt":{"rendered":"

When you borrow money, it\u2019s important to know how loans work. With a better understanding of loans, you can save money and make better decisions about debt, including when to avoid it. Learn how loans work before you start borrowing. The Cost of Money What does it take to get money? When you borrow, you […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1284","post","type-post","status-publish","format-standard","hentry","category-uncategorized","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"builder_content":"

\"\"When you borrow money, it\u2019s important to know how loans work<\/strong>. With a better understanding of loans, you can save money and make better decisions about debt, including when to avoid it. Learn how loans work before you start borrowing.<\/p>\n

The Cost of Money<\/strong> <\/h3>\n

What does it take to get money? When you borrow, you have to pay back the amount you borrowed plus interest, of course. You may also have to pay fees.<\/p>\n

Costs are a key part of understanding how loans work and which one to choose; in general, it\u2019s best to minimize costs, but costs are not always easy to understand. Lenders don't often show exactly how loans work and what they cost, so it pays to run the numbers yourself.<\/p>

For most loans, a basic Loan Amortization Calculator (see sidebar) will illustrate how things work. If you really want to play with the numbers, use a spreadsheet to see what happens when you change the variables. Costs can be tricky, so be sure to consider interest rates and transaction fees as you study how a loan works.<\/p>

Paying Down the Loan Balance<\/strong><\/h3>

It\u2019s only a loan if you repay it. As you figure out how loans work, you\u2019ll see that most loans get paid off gradually over time. Each monthly payment is split into two parts: a portion of it repays the loan balance, and a portion of it is your interest cost. An amortization table shows how this works, and how interest costs go down over time.<\/p>

A loan may or may not have a \"term,\" a length of time over which you repay it. Some mortgages last for 30 years, while other loans may only last 3 years. Credit cards are \"revolving\" loans, meaning you can borrow and repay as many times as you want without applying for a new loan. The term affects how your loan works; shorter terms require larger payments.<\/p>

Qualifying for a Loan\"\"<\/strong><\/h3>\n

To get a loan you\u2019ll have to qualify. Lenders only make loans when they think they\u2019ll be repaid. Your credit is important in helping you qualify since it shows how you\u2019ve used loans in the past. Good credit means you\u2019re more likely to get a loan at a reasonable rate. You may also need to show that you have enough income to repay the loan.<\/p>\n

If you don\u2019t have strong credit or if you\u2019re borrowing a lot of money, you may also have to secure the loan with collateral. This allows the lender to take something and sell it if you\u2019re unable to repay the loan. You might even have to have somebody with good credit co-sign the loan, which means they\u2019ll promise to repay it if you can\u2019t. Sometimes a well-written letter can help.<\/p>

How Loans Work in Practice<\/strong><\/h3>

Now you know more about borrowing in general, but how do loans work in everyday life? When you want to borrow, you visit with a lender and apply for a loan. Your bank or credit union is a good place to start; you can also work with specialized lenders like mortgage brokers and peer to peer lending services.<\/p>

After you provide information about yourself, the lender will evaluate your application and decide whether or not to make the loan. If you\u2019re approved, the lender will send funds to you (or it may go directly to another person; somebody you\u2019re buying a house from, for example). Shortly after funding, you\u2019ll start to repay, usually monthly.<\/p>

If you want to save money, you can generally repay loans early. Figure out how your loan works to see if there\u2019s any cost to prepay and make sure it makes sense before doing so.<\/p>

For more detailed information about the entire home loan process, click Loan Approved<\/strong>\"\"<\/a><\/p>","_links":{"self":[{"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/posts\/1284","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/comments?post=1284"}],"version-history":[{"count":35,"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/posts\/1284\/revisions"}],"predecessor-version":[{"id":1334,"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/posts\/1284\/revisions\/1334"}],"wp:attachment":[{"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/media?parent=1284"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/categories?post=1284"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/box5773.temp.domains\/~debbiey7\/wp-json\/wp\/v2\/tags?post=1284"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}