What is the difference between a home equity loan and a refinance?

A home equity loan and a refinance are two different types of borrowing when dealing with mortgages in Washington. A home equity loan is a loan taken against the equity of a home. Equity is the market value of a property minus any existing mortgages or liens against it. Home equity loans are usually used to finance large expenses such as home repairs, college tuition, medical bills, or other high-cost purchases. A refinance is the process of obtaining a new mortgage loan to pay off an existing mortgage loan. The refinance typically involves a new loan at a lower interest rate than the existing loan, with the difference in loan cost used to pay off the existing loan. This helps to reduce the overall cost of the loan and can provide greater financial flexibility. Refinancing is often done when interest rates have dropped significantly, allowing borrowers to save money. Both home equity loans and refinances are regulated by mortgage law in Washington, including rules regarding the maximum loan amount, loan-to-value ratio, and other terms. Borrowers should consider these laws before deciding which loan is best for their needs.

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What is the difference between a home equity loan and a refinance?

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