Using Equity as Security
The Chinese sage Confucius once proclaimed that ‘lack of patience in small matters can create havoc in great ones’, but then again he’d never heard of quick cash loans. Admittedly there’s a lot to be said for taking things slowly, but when you’re faced with a forgotten utility bill or an emergency medical charge; then it’s time to act quickly.
When it comes to getting a quick cash loan, homeowners are one step ahead of the competition. Financial providers view property as collateral which can be used to secure a loan; hence homeowners can expect better rates and repayment terms. These types of ‘secured loans’ are also known as ‘homeowner loans’ and ‘equity loans’.
In the past organizing a homeowner loan took both time and effort: You were required to supply reams of personal documentation which the lender could take up to two weeks to process. To further lengthen the process loan providers had to comply with federal law stipulating a three day ‘right of rescission’; whereby borrowers had three days after closing to decide whether or not to keep the loan. While the law was designed to protect borrowers; many lenders simply withheld the check until the three-day period has passed.
However, in today’s marketplace there are a growing number of financial organizations who offer genuinely quick loans. The processes involved have been drawn-up to circumvent federal law and work as follows: The first step is to fill out an online application form, which is usually approved within a matter of minutes. You’ll then receive two loans; a quick cash loan (unsecured) and a standard equity loan. In effect; you’re being offered a cash advance on an equity loan.
It’s important to be aware that such loans don’t come cheap. Interest rates often climb above 10%, while standard equity loans are set at about 6%. Of course the main selling point is that you get hold of funds quickly, but the flipside of this is that you stand to loose your property if you continually default on repayments.
Hence, when it comes to getting an equity loan it’s best to forget the quick bit and take things one step at a time. It looks like Confucius might have been on to something after all.