Question:

How to compare a mortgage vs home equity loan?

Answer:

Firstly, a mortgage vs home equity loan is not easy to distinguish, as mortgages are home equity loans. Even though home equity loans are referred to as second mortgage loans very often, when they are used to finance a home purchase, they come into first lien position.

Home Equity Loan and Lines of Credit Rates

Currently, a HELOC may be used as a first mortgage - HELOC rates are tied to the prime rate and have dropped about and under 6% for excellent credit borrowers and low to average LTV. Conventional 30 year fixed rate mortgage currently has rates very close to HELOC rates.

In comparison, home equity mortgage loan rates are comparable to second mortgage loan rates as they have rates over 7-7.50%.

Usually, HELOCs and home equity lines have similar rates to second mortgage loans and are natural substitutes for second mortgages in a combo loan.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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