Secured Loan Got Us A Home Of Our Own!
When my wife and I discovered that she was pregnant we became frantic. Where we lived at the time wasn’t exactly the size required for a young family! We needed a starter home; a place for our child to grow up. We wanted to buy somewhere that wasn’t too big but equally allowed us the space to have a room for our child when she was born.
Getting a mortgage was going to prove difficult as both my wife and I already had bad credit records as a result of student debt and a couple of missed payments. A friend suggested we try to source a secured loan to allow us to get a foot on the property ladder.
The Collateral
One of the terms of a secured loan is that in order for the lender to process the application, you would have to offer something up as collateral, usually something of equal or more value than that of the actual loan. We were getting a loan for GBP 45,000; unfortunately, there was nothing we owned that was worth that much. We were at a loss to find something either one of us possessed that would even come close. Fortunately, my wife’s parents were gracious enough to allow us to use their home as security for the loan.
Before the house could even be considered as collateral the bank had to send out property valuers to confirm the market value. Fortunately, the house was valued at over GBP 300,000, well over the amount of equity needed for the secured loan. In addition, my wife’s parents had no mortgage or loans themselves secured against this property. Once the house was valued and written in as appropriate collateral for the loan, we entered the credit check phase of the loan process.
Remember, this is where my wife and I had some serious problems; neither one of us expected to be able to walk away with the loan money. Thank goodness that the person reviewing our application was willing to work with us in getting our credit reports cleared up. He made a list of all the debtors that my wife and I had to contact to clear up some of the financial problems. After a week of discussions, some pleading and promises of prompt payments upon the receipt of the secured loan, we were finally able to sign the completed application and wait for final approval.
The Payout
Once the papers for the secured loan were signed and processed, the money was deposited straight into our bank account. We paid off our creditors as we had committed to and the remainder of the money went towards purchasing a nice 2 bedroom mobile home. A mobile home wasn’t exactly what either of us had imagined as our first home, but it was still a lovely feeling walking through the door of own home for the first time rather than renting some dingy flat.
We had a home to call our own, a place to raise out daughter and a place we could decorate as we saw fit. The feeling of freedom and accomplishment was overwhelming. Taking the chance on a secured loan was a good idea and one that brought us home!
Derek Rogers
http://www.articlesbase.com/non-fiction-articles/secured-loan-got-us-a-home-of-our-own-83920.html
Comments
if i get home loan secured in this taxable year, can i deduct interest payments made before loan secured?
my parents helped my husband and i purchase a home this year. we have a loan agreement with them and have been making payments of principal and interest since june of this year. the loan is not secured on the home. the home mortgage interest deduction for federal personal income taxes requires that the loan be secured on the property. if i get the loan secured before the end of this taxable year, can i deduct all interest payment made this year even if they were made before the home was secured?
no not unless they give you a tax interest statement to be filed. They are not a bank. But part of your closing cost can be deducted
I am a mortgage banker in TN & KY
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… yeah, what golfer said …
.. plus, even if you could deduct it as interest income, your parents would then have to claim the interest as income, so it’s like offsetting penalties.
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No, mortgage interest is only deductible if the loan is secured by the property. Any interest paid on a loan that is not secured by the property is not deductible.
You don’t "get a loan secured" you have to replace it with a new loan. Even if you agreed to a loan mod to the original loan, the interest paid before it was secured by the property would remain non-deductible.
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No, no matter if they report it to you or not. The only interest deductible is that AFTER the loan has been secured by your home.
Helen, EA in PA
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