There are many types of secured loans that are available to those who are looking to borrow money. So, it might be challenging to know what type of secured loan is best for you. Or, how to find the lender who will offer you the best rate for interest.
Knowing the benefits and purposes of each type of secured loan that is available to you is an important part of making an intelligent financial decision for your financial needs and your personal budget. What are some of the best types of secured loans for seniors today?
Reverse Mortgage
A reverse mortgage loan is the type of secured loan that is most commonly utilized by seniors today. Three types of reverse mortgage loans are available for borrowers to consider, and each has its own purpose.
The three types of reverse mortgages that are available to borrowers are:
- Single-purpose reverse mortgages
- Proprietary reverse mortgages
- Home Equity Conversion Mortgages (HECMs)
If you’re a senior in the United States, and you want more money to pay off your mortgage, pay for medical expenses, or even to supplement your income, you are in the demographic that can consider a reverse mortgage. Reverse mortgages work like this: you are able to convert part of the value of your home into cash that you can use, all without having to actually sell your home or add additional bills to your monthly budget.
Reverse mortgages also create tax-free funds, which do not require repayment until the senior leaves his or her home or dies.
However, there can be negative results to acquiring a reverse mortgage. Reverse mortgages can oftentimes have fluctuating and high APRs, or annual percentage rates for interest. So before you settle on a reverse mortgage, it’s important to consider all of your options.
Home Equity Line of Credit (HELOC)
HELOC loans are better for seniors than reverse mortgages due to their lower interest rates and revolving status. HELOC loans are funded based on the equity in a home. As the balance is paid down, the amount of available credit simultaneously increases.
Title Loans
Car, boat and RV titles are often used as collateral in secured title loans for seniors. These are excellent types of loans for seniors who need a small cash infusion to pay for home repairs or long vacations. They also help to pay off other debts with higher interest rates or looming late penalties.
Savings Secured Loans
Savings secured loans are excellent ways for seniors to secure loans without losing any money in a savings account. Savings or money market account funds are used as collateral. Collateral funds are commonly frozen from use until the savings secured loan is paid in full.
Loan amounts range greatly and are generally approved in amounts equal to the amount of the secured funds used as collateral.
By Admin –
