Understanding Different Types of Loans

By: techdev | 4 Feb 2022

 

 

 

 

 

 

 

 

 

 

Loans are used for various reasons, and you may need funding for different times in your life; each need calls for a different type of loan. Understanding the different types of loans, how they work, and how you qualify makes you an informed consumer who is ready to find the best loan for their situation!

Real Estate Loans

Real estate loans are loans to buy a house. It could be your primary residence, a second home, or even an investment home. The home you buy with the funds is your collateral and you must qualify for the financing.

Every loan has different requirements; in order to qualify for most programs, you need a 620+ credit score, debt ratio below 43%, stable income, and sufficient reserves to close the loan.

Uses for real estate loans

  • Buy an existing house as your primary residence
  • Build a new house for your primary residence
  • Buy a house to rent out as an investment

Personal Loans

Personal loans are for just about any ‘personal’ reason you have. You can use personal loans to:

  • Buy a car
  • Take equity out of your home (home equity loan or home equity line of credit)
  • Debt consolidation
  • Pay for college
  • Pay for emergency expenses

Personal loans can be secured with collateral or unsecured. Secured loans have lower interest rates, but unsecured loans often have attractive rates too if you have decent credit. The nice thing is you can use personal loans for any use.

Business Loans

If you’ve dreamt up the perfect business but don’t have the funding, a business loan can help you get started. Business loans are also great if you need more capital while running your business, need to buy equipment, or need funding to buy a property to run your business.

You don’t need a business credit score to get a business loan. Oftentimes you can qualify with the combination of a business and personal credit score, especially if you’re just getting started.

The types of business loans offered include:

  • Equipment financing
  • Term loans for immediate capital needs
  • Small Business Administration Loans
  • Medical Practice loans

Commercial Real Estate Loans

If your business needs to build or buy real estate, you need a commercial real estate loan. Unlike a business loan, commercial real estate loans are secured by the real estate you’re building or buying.

A commercial real estate loan works much like a residential mortgage. You can get financing for owner-occupied properties or even properties to buy and rent out to other businesses.

You’ll need good business and personal credit, stable income, and a low debt-to-income ratio to qualify.

Final Thoughts

Borrowing money can be intimidating, but when you have the right support at your side, it’s a lot easier. At Texas Republic Bank, we offer a wide assortment of loans, and we work with our clients one-on-one to find the right solution.

Our experienced bankers provide superior customer service, helping you find the loan that will cost you the least amount of money but help you achieve your financial, personal, or business goals.

As a local owned and managed community bank, we offer prompt and courteous service, competitive interest rates and terms and deliver quick approval process for loan requests.

Contact us today to explore your loan options!

 

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