A home equity loan and a refinance loan may seem almost the same for those who are not quite familiar with mortgages. Although the two might have the same solutions to your problems, they are quite different in their own ways. EWMortgage.com provides you with a brief overview of the difference between a home equity loan and a refinance loan.
Refinance
Homeowners generally choose to refinance in order for them to be able to save money and to reduce the mortgage cost. Refinancing helps homeowners lower their monthly mortgage payment if they currently have substantially higher interest rate than the most current rates. Refinance mortgage loans are generally a 15 or 30-year term. Consumers may want to consider a refinance loan if they are looking to borrow more than $25,000, other than that a home equity loan might be ideal. There are generally two types of refinancing programs homeowners should know about: no-cost refinance and cash-out refinance.
Home equity Loan
When you have equity built in your home; you have the choice of borrowing all or just part of your home’s equity. A way to figure out your home’s equity is by the difference between your mortgage balance and your home’s estimated market value. You have the choice between borrowing a lump sum loan or a revolving line of credit. Sometimes you are allowed to borrow up to 100% of the value of your home. Build equity faster when you obtain a home equity loan due to flexibility of a shorter term. This is a great way to help you pay off the loan sooner and get reduced monthly payments by spreading the cost over a longer term.
