Home loans and mortgages are asset-acquiring facilities that relieve an individual from making immediate lump sum payments. A home equity loan creates a debt against the borrowers house. According to this loan, the borrower has equity in his or her home as collateral. Collateral, here, refers to assets or properties that create a debt obligation. In real estate, the borrowers equity in an asset refers to the difference between the market price of a property, and the borrowers home equity loan. Equity is the interest that a borrower pays on the loan.
A mortgage, on the other hand, is a process of using property as security for debt repayment. It is a legal device used for securing an asset. By arranging for mortgage, a borrower can acquire residential or commercial real estate, without the need to pay the full price right away.
Choosing between Home Loans and Mortgages:
– Most home loans require the borrower to have a very good credit history. Hence, individuals with an average credit history are likely to be denied this loan.
– Closed-end Home Equity Loan levies a fixed rate of interest for a period of up to 15 years. The borrower...
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