Are the "zero percent interest" loans or specifically closing costs, so it’s important to budget accordingly. Home Equity vs. Cash-Out Refinance. What are the primary differences between a cash-out refinance and a home equity mortgage?
Home equity loans are based on the amount of equity (the difference between what you owe and the value of your property) you have in your house. There are a few other differences regarding how the loan is structured and the loan cost, which is detailed in the chart below.
In general home equity loans have a higher interest rate than traditional mortgages, but that isn’t always the case. Also, watch for lenders who advertise just an introductory rate. You might see 1.99% for one year, followed by a range of up to nearly 10%. There may also be a minimum amount you have to borrow.
The difference between a home equity loan and a traditional mortgage is that you take out a home equity loan after you have equity in the property, while you get a mortgage to purchase the property.