Are you confused about what a home equity loan and line of credit are? Read on and you will find the difference between the two and perhaps other useful data.

First thing you should know is what home equity is. Equity is the difference between how much the home is worth and how much you owe on the home. What you owe is the amount left to pay off the mortgage or mortgages as the case may be.

This equity can now be borrowed. The most common ways are a home equity loan or line of credit. Both of these use the house as collateral.

Collateral is property that you pledge as a guarantee that you will repay a debt. If you don’t repay, the lender can take your collateral (in this case, your house) and sell it to get the money back. Not paying back the debt can mean the loss of your house as that is what you have put down as collateral. The lender then will demand that you move and relinquish the property.

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Equity Loans