A home equity loan is a lump sum of money, received all at once to cover a large expense – like home improvement projects. Compare that to a home equity line of credit, which works more like a credit card.
When borrowing against your home equity, consider whether a continuing source of funds (home equity line of credit) or lump sum (home equity loan) will best help you achieve your goals.
Home Equity Loan: A home equity loan is a lump sum of money that you borrow against the equity in your home. Equity is the difference between the market value of your home and what you owe on any loans secured by the home, such as a mortgage loan. You can obtain a home equity loan using your home equity as security, generally without paying bank fees at closing. You can use that money to cover a large expense like home improvement projects.
Mortgage Refinance: A mortgage refinance loan pays off the remaining balance of your existing home loan and replaces it with a new mortgage loan. This is different from a home equity loan because it replaces your existing mortgage with another mortgage instead of being an additional lien on your home. You may refinance your home to borrow additional money for expenses or to receive a lower interest rate. Unlike a home equity loan, there are generally bank fees associated with refinancing.
For more information consult our home equity specialists.
Tap into the equity in your home when you need to with a reusable line of credit.
Cash out and make the most of your home's value with a single large loan.
Learn about using Home Equity Loans and HELOCs.
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