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

I own a home that is paid off but would like to take out a loan to fund some home improvements as well as help my parents pay off their home equity loan. Given this scenario can I take out a mortgage since mortgage rates are lower or am I limited to a home equity loan. I'm not interested in HELOC's.What is the difference between a mortgage and a home equity loan?
Just the packaging of the financial product. Once upon a time Home Equity Loans were called 2nd mortgages. The real difference is risk factor for the bank. Typically Home Equity Loans are 2nd to be paid in the event of a foreclosure or other bad financial happening - leaving them exposed if there wans't any many for them at the end of the day. So they charge you a bit more interest to compensate for this additional risk. Since you would be leveraging your house for the 1st time again, and the holder of this new ';note'; would be the only creditor and thus 1st in line for payment in the event of default, lenders may negotiate a little and get you a better rate.





Its probably something you should take to a local bank or branch where you can work with a real person. I wouldn't advise trying to work this deal through an online lender.What is the difference between a mortgage and a home equity loan?
All answers were helpful but unfortunately I could only pick one for th best answer.

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Mortgage repayments are generally over a much longer period of time than with a home equity loan, and the interest rates are lower with the mortgage. Go for it.
No, you can take out a first mortgage. HELOC's are generally second liens on a home, but the loan structure may allow them to be first liens as well.





The major difference is how much you are committed to and the time frame in which they can be paid.





If you KNOW you need to take out $30-50K or more, then get a mortgage on your home, as these are definately the best rates. HELOC's cost more b/c you are not required to take an immediate draw, and it's actually a line of credit...much like a credit card.





You don't want to take out a HELOC if you have another alternative.





PS: $30,000 is usually the minimum for a first mortgage...HELOCS are less...that may also make a difference to you.
The main difference is that with a mortgage you are borrowing all of the money at once and will be paying interest on the entire amount from day one. Home equity loans allow you to draw the funds on an as needed basis and only pay on the money you are using. They are both liens on your real estate and can be in first or second position. Most equity lines adjust the interest rate based on a % over prime and are therefore similar to adjustable rate mortgages in terms of interest.
There is no difference. They are both mortgages. Both will take a lien agaisnt your property. You have a couple options.





1. You take out a set amount of money, say 50,000. You will pay payments on that until you pay it off.





2. You take out a home equity line of credit for 50,000. That is like a credit card you can pay it down and then borrower against it again. You only pay what you take out. It can go up and down.





The first choice is amortized with a fixed payment to fixed terms, the second can adjust according to what you do with the money.
You can easily get a fixed rate first mortgage and get cash out (equity) for your scenario. Check with your local bank or mortgage company. You are not required to take out a HELOC.