What is a disadvantage of having an equity line v. a credit card?
A credit card is often unsecured or if secured, it is secured by the merchandise/good purchased with the credit card. If the borrower does not pay, the lender must sue the borrower in a court of law and obtain a judgment before taking over the borrower’s non-exempt real estate and/or attaching the borrower’s wages. On the other hand, an equityline is secured by a real estate. If the debtor does not pay, the lender has two options: 1) proceed in the same manner as the credit card’s lender i.e., sue the borrower in a court of law, OR 2) foreclose on the real estate without going to court. What is an advantage of having an equity line v. a credit card? The true interest rate for an equity line is substantially lower than the rate for a credit card . What is a benefit of having an equity line v. a loan? The borrower does not have to pay any interest for the unused portion of the loan which may be substantial. For instance, the borrower who needs to borrow $100,000 to make an improvement on
