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The Difference Between a Mortgage and a Home Equity

October 18, 2013

We get lots of questions about Home Loans and our resident expert, Mary Beth Geglia will be sharing the answers to some of the most common ones with us on the blog.

What is the difference between a mortgage and a home equity loan?

Mortgages:

  • Are used to purchase a home or investment property only
  • Can be extended for 30 years
  • Closing costs are paid by the borrower
  • Requires a solid credit score to be approved

Home Equities:

  • Can be used for any purchases
  • Has a term of up to 15 years
  • Closing costs are paid by the institution for the borrower (in return they have to keep  the loan with us for a minimum of 3 years and one day)
  • Have more flexibility to get people with less than perfect credit approved
  • Require a lien to be put on your home as collateral

Fixed Rate Home Equity loans would be suggested as a loan to replace an existing loan that currently has a higher interest rate such as paying off credit cards, paying off college loans, repairs to the home or to purchase a rental or vacation property.

If you have other questions about Home Loans leave us a comment and we’ll be sure to answer them!

 

 

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