Big purchases for your business, should you use credit cards or loans

Personal loans or credit cards, which is a better financial product for making big purchases?

By: Hitesh Khan/

Image credit: Hloom via Flickr

Should you use a personal loan or credit card when making major purchases? Assuming that you have good credit and can qualify to borrow money, here are some things to consider when choosing between the two financial products.

Best interest would determine the financial product you should use for big purchases

The first thing most people look at when borrowing money is the amount of interest being charged. It usually isn’t a problem to find personal loans with fixed rates. Having a fixed interest rate means there won’t be any surprises when you receive your loan statement. You’ll always know exactly how much to set aside each month for your loan payments.

Credit card interest rates sometimes fluctuate. While you may initially be offered a low introductory rate when you sign up for a card, ultimately that interest rate will rise. So you’ll have to be ready to make higher payments when the rate changes. Another thing to consider is that being late with a credit card payment is likely to result in the interest rate being raised significantly.

Personal rates on loans do tend to be lower than what is offered for credit cards. But if you don’t have the best credit you won’t qualify for the lowest rates for a loan.

Where to get a loan

There are several places you can go for a loan. Banks and credit cooperatives are popular with many consumers. However, you may actually get more personalised attention when applying for a personal loan from a non-bank financial institution. A non-bank financial institution also may be more likely to reconsider a loan request that has been turned down for some

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Mnuchin and Powell back jobless aid, small business loans

WASHINGTON (AP) — Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell said Thursday that the government’s top priorities in any new economic relief package should be to provide affordable loans to small businesses and further support for millions of Americans still unemployed.

With the prospects for any new federal aid package appearing dim, members of the Senate Banking Committee pressed both officials to list improvements that could be quickly made in the nearly $3 trillion in support that Congress has passed to fight the pandemic-induced recession that has nearly 11 million people still jobless.

Democrats on the panel urged Mnuchin, one of the administration’s top negotiators, to work harder to persuade Republicans in Congress to raise the amount of money they would be willing to support in a new bill. And Republicans urged Democratic members to consider a lower amount that might clear both the House and Senate with Election Day less than six weeks away.

Mnuchin agreed that business loans and enhanced unemployment support would be good priorities for Congress to back in any new package.

Pressed to state what the top priorities should be, Powell cited providing more support through the popular Paycheck Protection Program for small businesses and boosting unemployment benefits. The PPP still holds around $130 billion that had not been allocated when authorization for the program expired.

The original relief package provided a $600-a-week federal unemployment benefit, on top of whatever jobless aid a state provides. But the $600 benefit has expired. Many Republicans have argued that amount was so large as to dissuade some unemployed people from looking for a job.

President Donald Trump signed an executive order to provide $300 in weekly benefits, with states supplying $100. But that program has not been widely supported by states and has now expired.

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Renovation loans get pandemic boost as homeowners want home offices

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Vexed by work-from-home arrangements owing to the COVID-19 pandemic, homeowners are taking the long view and rethinking floor plans. The reality is, home offices are no longer a luxury.

In the initial three weeks of public health lockdowns in March, according to Gallup, the percentage of employed Americans working from home doubled to 62%. Of these workers, three in five said they’d prefer to work from home when restrictions are lifted. Homeowners are serious about dedicating room for work.

There’s a mainstay in mortgage finance poised to help in working from home. The Federal Housing Administration’s 203(k) rehabilitation mortgage insurance program is designed for borrowers to renovate when they purchase or refinance.

For over 40 years with Section 203(k) of the National Housing Act, FHA has been protecting lenders with fully-insured mortgage loans even as renovations are underway. In turn, the program opens access to much-needed renovation capital for borrowers.

As with any program, there are parameters, but this one isn’t confined to repairs. It allows for actual home improvements to complement contemporary lifestyles. And these days, that means renovation choices brought on by the coronavirus and the remote economy.        

“Since many people work from home – and plan to be home more now since COVID – I’m seeing both purchases and refinances with homebuyers and homeowners, who are planning projects to add more square footage to the existing structure of homes in their desired location, but not enough room to convert into space,” said Patrice Watkins, vice president of Renovation Lending at Guaranteed Rate.

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Low Curiosity Dwelling Improvement Loans

Cautious lenders verify the credit of a mortgage applicant before granting loans. The second loans are taken out along with a primary mortgage. A: In nearly all circumstances, interest rates for any such mortgage are going to be lower than if you borrowed the identical amount towards a bank card. The second sort is a secured mortgage. 6. Financial institution Loans: Regular Consumer Financial institution Loans come in useful as home enchancment loans, particularly for these residence owners who must borrow comparatively small amounts of cash with out much paperwork or delay.

These loans allow you to use one hundred twenty five% of the value of the property as assure of reimbursement. The interest paid right here is tax deductible and is lower than the curiosity on private loans. Which means that the lender will not close on the loan and release the mortgage proceeds except the property has been rehabilitated to the point that it will present adequate mortgage security.

Residence improvement can get costly and you don’t need to be taking out credit score loans each time you’ll want to repair something, however for the massive projects it may not be a nasty thought. Unsecured loans are an excellent option for individuals who shouldn’t have any fairness in their home to tap into.

It will allow you to take out a more substantial dwelling enchancment loans than you’ll get with an unsecured loan, and you can also get pleasure from decrease month-to-month repayments and higher interest rates. Residence equity loans is that they’re fairly simple to get.

When you’re looking at several lenders keep in mind that most will want your small business and work with you by decreasing their charges as a manner to ensure they maintain you as a customer. A: Generally, the perfect home enchancment …

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203K Loans – How They Work For Your Home Remodel

203k Loans for your home remodeling project
Over the years it has been more difficult to get a loan for an extensive remodel. Through this loan we have been able to get clients the money they need for the addition, bathroom remodel, kitchen remodel, or whole house remodel they have been dreaming of doing. Although there are a few things that make this loan a few more steps for us contractors then a conventional house mortgage we have worked through them making this a smooth process between you (customer), your contractor, the bank, and the consultant.

What is an FHA 203k Loan?
The FHA 203k renovation loan program provides funds for both the purchase and renovation of a home packaged into one mortgage loan. Once the purchase of the home is closed, renovation funds are held in escrow to pay for per-determined renovation work done by approved renovation contractors.

The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased.

HUD's 203 (k) program can help you overcome this obstacle by enabling you to borrow funds for the purchase or refinance of a property plus the cost of making the repairs and improvements in one mortgage. The FHA-insured 203 (k) loan is provided through approved lenders nationwide and is available to owners who will occupy the home themselves.

Down payment, credit qualification, loan limits and other requirements are the same as standard FHA loans. Additional guidelines are set forth specific to 203k loans to provide for renovation of the home.

What are the types of FHA 203k loans for home remodeling projects?
The Standard 203k is intended for more complicated …

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