| To many people, there seems to be very little | | | | While some of the accumulated equity in your home is |
| difference between a home equity loan and a | | | | used in a refinance loan, the loan is really meant to |
| refinance loan. However, there are some differences. | | | | establish new terms for your loan. The entire |
| You will find that a home equity loan, whether it looks | | | | mortgage is redone, and some of the accumulated |
| like a more traditional loan or a line of credit, offers a | | | | equity you have can be added in for a "cash out," |
| little more flexibility. However, the refinance loan usually | | | | where you take cash and your home is refinanced for |
| offers a lower interest rate. Both types of loans, | | | | an amount that is higher over all. You have no decision |
| however, have interest that is tax deductible. Make | | | | as to how to take your loan. It is lump sum. It is applied |
| sure you understand the features of both before | | | | to "pay off" your "old" mortgage, and the remainder, |
| making a decision between home equity loans vs. | | | | the "cash out" portion, is given to you. Usually, it is |
| refinance loans. | | | | possible to spread the terms out over a longer period |
| Home Equity Loans | | | | of time than a home equity loan, and you usually end |
| Included in home equity loans are home equity lines of | | | | up with a lower interest rate. |
| credit. You can decide how much of your equity you | | | | Home Equity Loans vs. Refinance Loans: Which is |
| want to use as collateral for the loan. Equity is how | | | | Best For You? |
| much you "own" of your home. It is the difference | | | | You have to decide which would work best for you. If |
| between how much you have left to pay on your | | | | your purpose is to mainly to fix an interest rate or |
| home loan and how much your home is worth on the | | | | change the loan term to something longer or shorter, |
| current market. You can borrow part of your equity, or | | | | and maybe get a little extra cash to pay some bills or |
| you can borrow all of it. Additionally, you can choose | | | | take a vacation, the home refinance loan may work |
| how you want to receive the money: as a lump sum | | | | best for you. However, if you are looking for flexibility, |
| or as a line of credit. This can allow you some flexibility. | | | | and you are not sure exactly how much you need, a |
| If you choose the line of credit, you don't have to | | | | home equity loan, in the form of a line of credit, might |
| borrow up to the limit, but more is available if you need | | | | be your best option. Do your research, though, and |
| it. | | | | shop around for a loan that suits your specific needs. |
| Refinance Loans | | | | |