Need to know what a loan is and how it could help you?

loan, loan 101, what is a loan, promissory note

What is a loan?

What is a loan? A loan is money offered to a borrower by financial institutions, usually with interest, on the condition that it will be repaid later. To borrow money from most banks the borrower must undergo an application process. The borrower will be subjected to a credit check, which includes the borrower’s current assets and debt-to-income ratio. This information is used to determine whether the borrower can afford to repay the loan with the interest.

Some loans require a guarantor — someone who agrees to be responsible for the debt you incur in the event that you are unable to satisfy the minimum requirements. Before receiving a loan the borrower will be required to complete a contract or promissory note, which states the terms, conditions and payment schedule of the loan. The promissory note will also list the amount of interest the loan incurs as well as any penalties for late or missed payments. Upon approval and completion of the contract or promissory, financial institutions will offer you a single payment and in return you will be required to pay small monthly installments for the duration of the loan.

Types of loans available include: personal, automobile, business, student, home and commercial loans.

If you’re looking to save money on your new home or downsize your monthly payments you may consider refinancing your home. Refinancing is a common practice used by home buyers to take advantage of lower interest rates, consolidate debt or reduce the term of a loan. Figure out why it would make sense for you to refinance — use the Texas Mortgage Calculator to determine your monthly payment amount.

Whether you’re looking for a Texas home equity loan or a Texas new home loan TMC can help you! Contact Texas Mortgage Center for updated information on interest rates or to apply for a loan online.