What’s the difference between a Home Equity Loan, Refinancing and HELOC
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A home equity loan is a lump sum loan with a typically fixed rate. They give you all the money you’re borrowing at once and you pay it back in installments.
Refinancing is choosing to change mortgages on a home. This could be advantageous if you can lower your interest rate, decrease the number of years you want on your loan, believe you have achieved 20% equity in a home and want to get rid of PMI, or if you’re in a bad spot and need to reset your amortization schedule to more years to lower your payment.
A HELOC (home equity line of credit) is like a lower interest credit card with your house as the collateral. You spend as you need to and interest is accrued as you spend, rather than on the whole available amount.
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