Home Equity Loan and A Refinance Loan(What Is The Difference)? - Posted by Rufus__NY

Real Estate Investing Real Estate Financing
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Posted by chris on June 14, 2000 at 04:18:47:

REFINANCE
The repayment of a debt from the proceeds of a new loan using the same property as security. We also consider the current owner’s placement of financing on a property that is not financed as a refinance transaction. (Source: FNMA Selling Guide, Glossary)

HOME EQUITY LINE-OF-CREDIT LOAN
A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her discretion, up to an amount that represents a specified percentage of the borrower’s equity in a property. (Source: FNMA Selling Guide, Glossary)

Mortgage Interest
Joint tax filers can deduct all the interest on a maximum of $1 million in mortgage debts secured by a first and second home. The maximums are halved for married taxpayers filing separately.

You can’t use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.

Equity Loan Interest
You may be able to deduct some of the interest you pay on a home equity loan. However, the IRS places a limit on the amount of debt you can treat as home equity debt for this deduction. Your total home equity debt is limited to the smaller of:

$100,000 for a married couple filing jointly ($50,000 for those who file separately), or
the total of your home’s fair market value–that is, what you would get for your house on the open market–less certain other outstanding debts against it.
The IRS rules about the home equity loan interest deduction are complicated. IRS Publication 936 explains the details.

-hth,Chris

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Home Equity Loan and A Refinance Loan(What Is The Difference)? - Posted by Rufus__NY

Posted by Rufus__NY on June 14, 2000 at 03:08:03:

My Question Is To Anyone Who Can Help Me:

What Is The Difference Between a Home Equity Loan and a Refinance Loan on a SFH?

Thanks In Advance.

Rufus__NY

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Re: Home Equity Loan and A Refinance Loan(What Is The Difference)? - Posted by dew

Posted by dew on June 15, 2000 at 21:43:36:

Or in other words…on a Refi, the owner is usually wiping out all exisiting loans on a property and replacing it/them with a new first (it is possible to take cash out “at closing” this way if there is enough equity/loan to value). A Home Equity is adding a 2nd (or 3rd, etc.) to pull cash out of the property. Can do this as a loan, where you get the full amount out after closing and start making payments on the whole amt. Or can do a line of credit, where you draw down on it as needed, up to a maximum established amount.
All of these types are usually “secured” loans because they become liens that are recorded against the property. Then you can get into UNsecured loans…
Hope this plain English version helps too.