Home Equity Loan or Payday Advance?

By: Jone Player
Home equity loans are a type of secured loan that can help finance major home repairs, medical bills or college education. This type of loan requires you to have excellent credit history and can result in your house being foreclosed if you default on your repayment obligations.

One type of home equity loan is the "closed end loan" which will provide you with a lump sum at the time of closing and you will be unable to borrow more later -- until the initial amount is fully paid off. You may be able to borrow over 100% of the appraised value of your home, but things like credit history and income also factor in. With an "open end loan," the borrower chooses when and how to borrow against their property's equity. You'll receive an initial line of credit and you'll pay low monthly fees. Home equity loans come with arrangement, originator, title, closing fees and other costs.

You may not be in a position for a home equity loan but you may still have a caved-in roof, water damage, a car repair bill, medication expenses or an upcoming college tuition due date you can't quite meet. Since many of us get paid strictly on the 15th and the 30th or on Fridays, there can be a lot of conflicts with payday due dates - in which case, it makes sense to borrow a payday advance to meet your deadline and just pay the lender with your next cheque. You won't be able to borrow as much - most payday advances only go up to ? 800. However, you won't be risking your house, your car or any of your assets either.

Many payday advance customers have bank accounts but prefer payday advances because they're so hassle-free. If you wanted a small loan from your bank, you would have to fill out much more paperwork and wait several days or up to a week to hear whether or not you're approved. They will scrutinize your borrowing / credit history in their assessment and there's always the chance you will be turned down. When you have impending deadlines, every single day counts - that's why payday advances are such an asset. You can be approved within moments and your borrowing won't go on your credit history, nor will your credit history be inspected prior to giving you the loan. All you need is a stable source of income - be it a job or government cheque - as well as a bank account. In fact, you can even be approved online!

Home Loans
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