What’s the difference between a Home Equity Loan, Refinancing and HELOC
In: 7
Home Equity Loan is a second loan that is junior to the original mortgage. A borrower still have your original mortgage after getting a home equity loan.
Refinancing is a loan that is used to repay the original mortgage in full it replaces the old mortgage (it’s possible to change the terms or increase the balance etc).
HELOC is similar to a home equity loan but it’s not quite the same it’s an approval to borrow up to X amount against the home but may not have any borrowing. It’s more like a credit card limit, the bank might agree to loan up to $100,000 at any time over the next year if you need it. This lets a borrower pay a fee and lock in terms even if they don’t have an immediate cash need or if the don’t know the full amount they might want to borrow. Once the line is drawn it’s very similar to a Home Equity Loan.
Latest Answers