What is the difference between a Home Equity loan, Home Equity Line and a mortgage?

Question

I am a first time home buyer and I want to be informed as possible.

Answer 1

To buy a home in the first place, you would have to take out a mortgage, pay thousands in closing costs, get a deed and you own the property, subject to making your mortgage payments. If you have equity in your home, that is some of the loan is paid off, you can borrow money based on home much ownership you have, that is a Home Equity loan. Or, you can set up a home equity line of credit. If you own your home or part of it, you can open an account where you write checks to borrow money up to the limit of your home equity line of credit.

Answer 2

A Home Equity Loan is simply a mortgage, often called a Second Mortgage (or third, if you already have two loans on your property.) When the bank issues you the home Equity Loan you get a lump of cash for you to spend, and you have a set time, payment and interest to repay it. In a Home Equity Line of Credit- You don't actually get a loan at that time. it is like a credit card, but instead of drawing off of your bank account, it draws off your home equity. You can leave it there, and don't use it, not paying anything to the bank. But if something comes up, like you need to make home repairs, say, you simply write a check off the credit line and the loan begins then, for however much you actually use. So you could have a HELOC for $50,000, not use it for 6 months (and pay nothing) then use $20,000 and start making payments on the $20,000 you used. Hope this helps

Answer 3

A mortgage is a loan you take out to buy a home, usually between 15 & 30 years.
A Home Equity Loan is a loan you take out usung the equity that you have in your home, either from paying down the principal on your mortgage or from an increase in the value of your home, or both, as collateral for borrowing money. They're usually used for home improvement projects like adding a room or finishing a basement, etc.
A Home Equity Line Of Credit is a line of credit you establish with a bank, which you can use at any time, to borrow money against the euity in your home.

Answer 4

Well they are all mortgages. A mortgage is a deed of trust put against your home. The terms of this deed make up what type of mortgage it is.

Home Equity loan: This would normally be a loan in the second position on your property, after you first mortgage. To make it easy im using 100K as an example. Lets say you owe 80,000 on your home and you take out 15,000 as a home equity loan. They would be on second position on your property and its a fixed loan for say 20 years.

Home Equity Line: Using the same scenario they give you 15,000 against your property and its basically like an overdraft with your bank account. You take out 5,000 to go on vacation.. Then you pay it back and the 15,000 is still there. Its basically a line of credit of up to 15,000

Mortgage: As I said before all of these are mortgages, a mortgage is just a lien put agaisnt your property. The type of the loan you want depends on your needs.

Answer 5

a mortgage. the loan you take out to pay for the purchase of your home....

home equity loan-a one time lump sum loan on the equity (the difference between what you owe on the house and what it's worth) of your house.

home equity line of credit-like a home equity loan but it's an open line of credit that you can borrow from and pay back for the term of the loan (however long your line of credit is open for) so you can take little amounts or large amounts or borrow when you want. you don't have to take it all at once.

Answer 6

In Texas, a Home Equity Loan is money advanced to you at closing and can be used for anything. There is a lien filed of record on your real estate.
A Home Equity Line of Credit is funds you can draw from, still placing a lien on your real estate. It can be used for anything. After you payoff the funds borrowed against the Line of Credit, the lien still exists until a RELEASE of the Home Equity Line of Credit is filed of record.
A Mortgage is a document filed of record placing a lien on your home and is usually for the purchase of your home. Funds are advanced by the lender to pay the seller for the home.

Answer 7

All are based on raising money from the equity in your home.
Mortgage - this is a loan using your house as collateral
Home Equity Loan - This is a loan against the increased value in your home
Home Equity Line of Credit - This is an arrangement with your bank to borrow a fixed amount of money against the increased value of your home. Its pre-arranged for your convenience.
Go to www.yourpropertypath.com and use the mortgage section for a ton of good articles on the difference

Answer 8

Check out this website: http://www.mtgprofessor.com/glossary.htm

I recommend it to all my clients for education and self-empowerment in the loan process. An informed consumer is always in control of their destiny.

I am a Senior Mortgage Specialist located in Dover,NH and licensed nationwide. Feel free to ask me any questions you may have. [e-mail]