Monthly Archives: July 2017

Which One Do You Need? HELOC Loans, Home Equity Loans, or Payday Loans

Payday loans are quite similar to personal loans. In fact those that have a steady income irrespective of their credit scores or credit reports usually qualify for the payday loans. You don’t even need a co signer for the loans. Those that have credit issues or don’t have credit issues take payday loans. It’s a loan taken to cover the expenses till the next paycheck or salary. If you need money for just a few weeks, you can apply for payday loans. These are short-term loan advances. You can qualify for payday loans up to $2500.

There are a number of specialized lenders both online and offline that offer the payday loans. All that you need to do is prove that you have a steady source of income and have residency in US. Your utility and credit card bills can prove the same.

You can apply online for payday loans. All you need to do is fill the online form and get approval within minute. Within a few hours your bank account will be credited with the loan amount. You can use this payday loan amount for meeting your various cash flow issues. The loan interest rates typically range between 15-30% for a 2-week period. This actually translates to rates that range between 390-780% APR. This is quite a steep price to pay for taking these short-term loans.

Before taking the loan, the borrower will write a post-dated cheque for the entire amount plus the interest charges. On the date of maturity, the cheque is automatically debited from the borrower’s checking account. States differ on the legislation for payday loans. Check the legislation in your state before taking the payday loan.

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Home equity loans

Home equity loans are easily available and are also known as second mortgages. With the mortgage loan rates extremely low, it makes sense to take home equity loans and pay off the mortgage loans that have a higher interest rate. Home equity loans are given against a collateral. A collateral is a property that you pledge with the guarantee that the lender has the right to take away the property in case the loan isn’t paid back.

The collateral for the home equity loans is the home itself. Usually when you take a mortgage loan, you would make a down payment. The down payment and the subsequent mortgage payments that you have made increase the equity in your home. Home equity loans can be used to pay back credit card loans, make renovations to home and can also be used for funding college tuition fees and other such expenses.

Home equity loans are usually paid back in a shorter time period than the first mortgage loans. It also makes sense to have the property appraised when taking home equity loans. If the value of your home has increased, then you would get a higher home equity loan. But in the meantime, if the value of your home has decreased, then it makes no sense to take a home equity loan. Home equity loans have a shorter time frame for payment as compared to first mortgages. While first mortgage loans can last as long as 30 years. Home equity loans last for usually 15 years or less.

Another option is the HELOC or the home equity line of credit. The HELOC operates just like the credit card. You may choose to utilize the entire credit or a portion of the credit.

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HELOC loans

The HELOC loans differ from a home equity loan. HELOC stands simply for “home equity line”. This means that you can receive a line of credit up to a particular line of set credit by lender. For example if you have a HELOC for $10,000 for 10 years. It means that you can borrow $10,000 or portions of it during a 10-year period. You would have to pay the interest and the amount back. You can draw on this line of credit by using a check, a credit card or in other ways.

Usually HELOC are used as second mortgages, but that’s changing. But you can also use it for your first mortgage. Since the balance for HELOC may change everyday, interest rates are levied on a daily basis rather than on a monthly basis. This means for a 6% HELOc loan, the rate will be calculated as .06 divided by 365.

The draw period for the HELOC is 5-10 years and the repayment period is 10-20 years during which the payment has to be made for the principal amount. One of the major disadvantages of the HELOC is its exposure to the interest rate risk. The interest rate on the HELOC is variable based on the index such as the prime rate. This means that the interest rate will change over time. While home equity loans have a fixed interest rate or ARMs that have a band. This means that the interest rate won’t fall below a certain rate or rise above a certain rate.

Simple Ways to Pay Off Student Loan Debt: Helpful Tips for the Borrower and Family

College is all about academic development and growing/maturing as a young adult. Many valuable life lessons are taught in college….that aren’t found in a textbook. However, once the proud student receives their college degree and arrives in the “real world”, student loan debt can feel like a burden and paramount life stressor. Unless the recent graduate is on the fast track and has found the perfect high paying job, it will be difficult to pay off student loan debt with little or in some cases no money. Here are some simple yet effective ways to pay off student loan debt and avoid the stress of an uncertain payment future.

Ways to Pay Off Student Loan Debt

Many college freshmen never think about the future because it seems so far away. Unfortunately, a large number of college students never formulate a plan for paying off their student loans. Before the process gets exhausting and frustrating, make plans. This simple yet vital idea can save the student, parent, or guardian the headache that will await them in a few short years. Once the student takes out a loan, start making plans. If the borrower stays on top of their situation, the stress will be so much less.

College students want to experience life and have some money on the side. Getting a part-time job is certainly not uncommon, but many students only make money to spend money. The money is immediately thrown away to cater to a current want or need. Spending money in college based on want or need is perfectly acceptable; however, it’s also important to spend wisely. The idea of saving money is a forgotten art in many cases. During the college years it’s very important the save money on the side. The money saved “could” be enough to pay off the loan.

Do research. In the same way students would plan for the future, research is also a vital tool. Understand what plan or program is right for the current situation. Take the proper time to study the situation and find the outlets and options available that cater to specific needs. Lack of knowledge and lack of proper research can actually make the situation much worse. Understand the current payment plan and understand the borrower options and rights by contacting the lender or the college. In our tough economic standing the student may need to contact their lender and discuss deferment options. It is always wise to NEVER default on a loan because the borrowers’ credit will be adversely affected

Financial Aid, Scholarships, and Grants

Have a working knowledge of financial aid and apply for scholarships. Many students have loans, but don’t have the first idea of their situation. They have no clue who to speak with or how to handle a problem. The financial aid office is there to help, not hurt. If a situation occurs, feel free to ask questions and ask for help. Also, apply for scholarships. Complete numerous scholarship applications and understand the ones that are right for the current standing and unique situation. Scholarships and financial aid assistance are critical in the understanding of student loan payment and the student loan process.

Federal grants are also a vital tool for college students. Apply for as many grants as possible. Federal Supplemental Educational Opportunity Grant (FSEOG) and the Federal Pell Grant (Pell Grant) are two of the most common grants available. To file for most federal grants, loans and work study, students need to complete the Free Application for Federal Student Aid (FAFSA). Once again, ask questions and find out the proper channels to frequent in respect to websites. Understand which grant is right for the individual situation. Research is essential! What’s right for one person could be wrong for the other.