You may remember the Great Recession that took place over 10 years ago. One of the reasons the Great Recession occurred was because of unscrupulous lenders who gave home loans and personal loans to people who couldn’t afford the loans.
While the Great Recession was horrible, there were some benefits that came out of it. Here are some reasons loans are now safer than ever.
Your Credit Has to Be Good To Qualify
The Great Recession left millions of Americans underwater and unable to pay their loans back. In response to the recession, lenders upped their requirements for loans. Many homeowners were able to get loans with substandard credit scores, which is under 600 points. Now, the requirements for getting a loan are much tighter. While this makes it difficult for people with fair or poor credit to get a loan, it does make credit safer for everyone.
If you want a loan, and your credit isn’t great, you can work towards a better credit score. There are all kinds of apps and programs available for you to try. The less credit you use, and the more months you pay your bills on time, the higher your credit rating.
Interest Rates Are Lower
The Great Recession brought with it a lot of heartaches, but also a lot of lower interest rates. You may not be thinking about interest rates, but they represent the amount of money you’ll have to pay back in addition to your loan amount.
In the past, lenders could charge an exorbitant amount of interest on loans without fear. However, state and local governments have limited the number of interest lenders can charge, which is safer in the long run.
Unscrupulous Lenders Are Out of the Market
When the Great Recession occurred, government officials quickly learned that one of the reasons the recession was so bad was due to unscrupulous lenders. Often, lenders took advantage of people who were either desperate for credit so they could get loans, or seniors looking to add to their income.
Reverse mortgages allow seniors to receive cash in a lump sum for their homes, with the understanding that when the adult has died or has to leave their home, the home becomes the property of the reverse mortgage company. Many seniors like reverse mortgages because they can take the cash as a lump sum payment, or as a monthly annuity payment without a mortgage payment.
When the financial market crashed, companies threw a lot of money from reverse mortgages towards desperate seniors. When seniors were desperate to get extra cash, they didn’t take into consideration a reverse mortgage calculator like this one https://reversemortgagereviews.org/reverse-mortgage-calculator to determine how much money they could get for their homes. Many seniors were defrauded out of their homes because they did not read the fine print on their reverse mortgage contracts. Thankfully, that is no longer the case.
After the Great Recession, the federal government put new regulations in place for reverse mortgage lenders to ensure that seniors get a fair deal for their homes. The government also regulated other lenders as well, so taking out a loan today is much safer.
In addition, the terms of any loan must now be spelled out clearly to the person who is taking out the loan. This includes include how much you will need to pay back in all, what the interest rate is, how much you are borrowing, and when the loan will be paid off.
There Are Different Ways to Get Money
When you need money, your first thought might be to go to a bank for a loan. However, there are other ways to get money that don’t involve asking a bank or credit union. If you are looking for money for a business or a project, you may want to look at crowdsourcing or non-bank lending agencies. These agencies allow you to get the money you need at a low (or no) interest rate. While you may not have to pay back a crowdsourcing fund, you would have to pay back a loan from a non-bank lending agency.
Also, government regulations and safeguards allow you to try alternative sources of funding. If you have a home, you may qualify for a home equity loan or a home equity line of credit. These loans are great if you want to make repairs on your home, make a large purchase, or taking that vacation of a lifetime.
No matter what kind of repair or purchase you want to make, or if you want to cash out the equity in your home, there should be a loan product for you to try safely.
