There are many people who confuse the differences between a refinance loan and home equity loan. They both can provide a way to get access to the equity you have built up in your home but they are two distinctly different kinds of mortgage products. Refinancing a home loan essentially eliminates the original mortgage loan while creating a new mortgage to take its place. People may choose to refinance a loan in order to lower a loans interest rate or decrease the monthly payment on the mortgage. Others look to refinancing a mortgage so they can get cash to cover a short term expense like a family vacation or kitchen remodel.A home equity loan works somewhat differently than a refinance mortgage does. This type of loan is essentially a second mortgage used to pull out cash using the equity in your home. An example of this would be if your home was worth $250,000 and the outstanding balance on your mortgage was $150,000, you would have $100,000 in equity. You may be able to secure a home equity loan in an amount up to the $100,000 in equity you have.Deciding between Refinance and Home Equity LoansMaking a determination on whether to obtain a refinance or home equity loan can at times seem complicated and confusing. It is important to take some time to research each option as well as lenders and compare the options and their costs to determine which type of loan works best for your current financial situation. Remember, not all loans or lenders are the same. Lenders often have different rates, terms and fees and costs can very greatly from lender to lender.There is no need to rely solely on your local banker for your mortgage needs any longer. The internet has taken the power away from the banker and given it to the consumer. Within minutes you will be able to obtain rates and terms from multiple lenders giving you the information you need to make an informed decision as to who has the best deal for you. So remember, there are a lot of different mortgage options available to you today so take a few minutes and make sure you are getting the right loan at the best price.
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