Difference Between Mortgage and Home Equity


So you are thinking of buying a home or maybe you are interested in getting a home equity loan, well either way you are going to have to make sure that you are educated and aware on a few things, one being the difference between mortgage and equity. Only by making sure that you have a good understanding are you going to know how to make the right decisions when it comes to this sort of thing.There is a huge difference between them that you are going to have to be aware of, and the details of which will be discussed in more detail here.In order to see the difference between them, you need to take the time to learn more about each so that you can see where these differences lie. A mortgage is a loan that is taken out by someone in order to buy a home. When you do not have the full amount to buy the home, which is the case for most people, then you are able to apply for and get a mortgage which is a loan from the bank that allows you to buy the home.Then you have to pay this loan back just as you would with any other type of loan, with interest accrued. There are a few different types of mortgage loans that are available to choose form and you really want to make sure that you spend the time learning more about each so that you can be sure that you are choosing the right one for you.Now in order to see the differences you need to be aware of what home equity is. Home equity is basically the amount of value that a homeowner has in your home. The longer that you have owned your home for and the more payments you have made on your mortgage, the more you have.This is important, because often times homeowners will want to take out a loan sometime down the road, and if they need to they can get a home equity loan which is basically them putting their house value up as collateral on the loan and if they don’t pay their home gets taken, which is risky but if you pay your bills you will not have to worry. Now you know the main difference between mortgage and home equity.