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Getting a loan can be a long winded process, as there are many different loan products to choose from, with different loans available to suit different needs and circumstances. Before you apply for a loan you need to make decisions with regards to the type of loan you are looking for, and one decision that you need to make is whether you are looking to take out a secured or an unsecured loan.

Secured and unsecured are the two main loan types, and all loans come under one of these categories. There are key differences between these two loan types and the eligibility requirements for each of these loans types also varies, which means that some people may be eligible for both loan types, whereas others may only be eligible for one or the other. You need to carefully check the eligibility requirements in order to ensure that you do not waste your time applying for a loan that you do not even qualify for.

A secured loan is a loan that is secured against an asset, and usually this is the home, which means that you must be a homeowner to take out a secured loan. An unsecured loan, on the other hand, is not secured against any asset, and is based on contract and trust. Because of this the risk to the lender is greater, and therefore you will usually need to have a good credit history and rating to get an unsecured loan, although you do not have to be a homeowner.

There are some basic key differences between secured and unsecured loans, which could help you to make your decision when it comes to choosing the most suitable loan type. When it comes to borrowing power the secured loan offers far greater borrowing potential based on the equity level in your home and other factors, whereas the unsecured loan usually offers a maximum of 25,000 based on your financial and credit status amongst other things.

Another key difference between a secured loan and an unsecured loan is the repayment terms and periods available. Most unsecured loans offer repayment periods of up to five years, although some may offer as long as seven or even ten years. However, with unsecured loans you can enjoy far longer repayment periods, and this means that you can spread your borrowing over a far longer term, which can help to keep your monthly repayments down.

Another thing to bear in mind that is that if you have damaged credit you may find that you are unable to get an unsecured loan, because lenders will usually require you to have a good credit history. However, because secured loans are secured against the home the risk to the lender is lower, and therefore those with bad credit may find that they can still get a secured loan even if they are not able to get an unsecured loan.

Investing can be a very daunting endeavor filled with many pitfalls and uncertainties. Everywhere you look for help there are usually more questions than answers and ultimately more companies that want your money whether it be for investment purposes or to simply line their pockets teaching you how to invest.

This is why it's important to have a clear plan and a predetermined set of investing goals planned out before you get your feet wet. This involves doing a lot of research and gathering independent facts.

One thing that can help you along the way is to focus on investing from the point of loaned and owned dollars. This strategy will help you get tax breaks, positive returns, and at the same time will help minimize the risk of investing. The first option is to loan out your money to either to a mutual fund, a common bank, a corporation, or the government.

With this strategy there are certain benefits and limitations. When you invest in low risk options such as CDs, savings accounts, or bonds the benefit is that there is virtually no risk and your return on investment is guaranteed if not insured by the company or bank.

The downside to these types of investments is that the return is predetermined and fairly low. Especially in a stagnating or recessing economy the return might only be slightly higher than a regular savings account. Furthermore the return on your investment is fully taxable income.

The other method of investing to consider is owned dollar investing, this involves any form of investing in which you invest in a publicly owned corporation. With your investment you purchase a share of ownership in the company or a mutual fund. Your investment potential is solely based on how well the company performs. When it does well the value of your share increases and you receive a positive return.

Conversely if the company does not perform well or if economic factors force the company into trouble the value of your share drops significantly and you essentially have lost your investment. However there are many benefits to this form of investing such as a much higher potential return then loaned money can give you. Also, if you go with a buy and hold strategy then there are certain tax advantages that you can benefit from to lower the amount of your return that is taxed.

The concept of diversifying comes into play when you split your investments between these two forms. This will involve both loaning out money with a set return and taking some risks by buying fractional ownership of businesses or mutual fund companies.

As with all forms of investing there are still no guarantees and the best that you can do is to perform the best research and consult professionals before risking your hard earned money. It is very easy to get caught up in the hype that is out there with quick return and no work, so keep your head on straight and control your emotions when investing.

Budget Your Income and Expenses

Being financially prudent throughout one's life has huge advantages that touch almost every facet of our being. One critical means of establishing and maintaining financial health is through the use of a budget.

Rather than serving as a restraint on the quality of life, a budget actually can help to ensure you are able to financially maximize your ability to live life to the fullest. The main function of a budget, really, is simply to track and balance your cash inflows and outflows.

Certainly you want more coming in than leaving. But if that is in fact not the case, the result will be debt. If you don't feel you have good budgeting skills or simple mathematical competency today, you can learn fairly easily. Working with a budget is definitely worth the relatively small effort.

Create a Financial Plan

Develop a good financial plan. This exercise not only includes the budget referenced above, but also a broader set of objectives on how you will - or hope to - make clear-minded decisions on where to commit your limited resources and to invest any surplus beyond required expenses.

Certainly life's unpleasant surprises at times necessitate a person or family to pay or borrow for unanticipated expenses. However wherever possible, avoid making debt part of your financial routine. Plan for the future and how you will pay for ongoing needs without incurring debt.

Borrowers and the Law

All countries have laws that protect their debtors from creditors. The laws in the US are extremely strong. But creditors can still find creative means of collecting what they are due.

It is best, though, when a borrower and creditor are able to avoid an adversarial relationship and talk openly about the person's financial struggles to develop a creative alternative for repaying a loan. Such an approach is much more efficient than attempting to hide from a creditor.

Death and Debt

When a person dies, any outstanding debt will still be extracted from the person's estate. Taxes are paid to the government first, and then debts to the various creditors. Anything remaining in the estate is then distributed according to the dictates of the deceased person's will.

So if at all possible, it is best to repay debts during one's lifetime rather than leaving those financial obligations to the post-death estate distribution process and potentially depriving your family members from a needed inheritance.

Secured vs Unsecured Loans

Loans may be secured or unsecured. Secured loans have the backing of collateral or some security, such as a home. Unsecured loans, on the other hand, don't have that same backing and consequently incur a higher rate of interest because the risk is much greater to the creditor.

The best option, if indeed it is an option, is to avoid loans altogether. Of course, few people have the financial ability to hit a lofty goal like that. After all, even a very modest home will cost $100,000 or more, and a reliable automobile will be several thousand dollars. However, to make debt-free living a long term objective will help to keep you on a path of financial sanity in a spend-now-think-about-it-later world.

While shopping for a home loan, brokers and lenders will offer to pre-qualify or pre-approve you for a mortgage. Home loan pre-qualification and pre-approval are different and distinct processes, so it is important for you to understand the difference.

Pre-Qualified

A loan officer or loan processor working for a mortgage lender or broker can typically pre-qualify you for a home loan within an hour. Getting pre-qualified for a home loan is a good first step that will let you know if you should proceed to the pre-approval process. To get pre-qualified you will need to complete a mortgage application and allow the broker or lender to pull your credit. They will review the mortgage application and your credit and let your know if you are pre-qualified.

Pre-Approved

Only a mortgage underwriter can pre-approve you for a home loan, loan officers and processors can not. Typically mortgage brokers do not have underwriters on staff, so they typically can not pre-approve your home loan. A valid pre-approval is the best tool you can have when shopping for a new home. The key is to ensure that it is valid. A valid pre-approval has been underwritten by an authorized underwriter (an underwriter is the final person that says your loan is approved). If an underwriter pre-approves your home loan application upfront, all you have to do is find the home you want, have it appraised, and then you should be able to close in just a few days. Some mortgage brokers and lenders will issue pre-approvals that have not been reviewed by an authorized underwriter, be sure to ask.

To get pre-approved for a home loan you will need to provide the underwriter with your income and asset documentation (W2's, Bank Statements, etc). The underwriter will review your credit, mortgage application, documentation, and then approve you for a set loan amount and property value. Once you have been pre-approved for a home loan you are ready to start shopping. The process typically takes a couple of days.

Knowing exactly what type of home loan you can obtain will allow you to shop and negotiate with confidence. For example, you could inform a seller that you are pre-approved for the mortgage and you are prepared to close next week. If the seller needs to close quickly, it will not matter if there is another buyer that cannot close for weeks or months. Plus, sellers do not like to take their properties off of the market for long periods of time. The ability to close quickly is one way to get a great deal.

Realtors will work much harder for you if they know that you have a valid pre-approval. Think about it, if the realtor is spending days or weeks driving you around, they want to make sure that they are going to be compensated for their efforts. By ensuring the realtor that you are approved, they will be willing to spend more time working for you.

In summary, a pre-qualification is a good place to start. Once you have the pre-qualification, you should proceed to the pre-approval process. Watch out for mortgage brokers and lenders offering pre-approvals that have not been fully underwritten by a mortgage underwriter.