What is the difference between a home equity loan and a mortgage?
With a home equity loan, you are applying for a loan and using your home to guarantee repayment. You already own the home and have some equity built up. When you take out a home equity loan, you will sign a mortgage giving the lender a lien on your property. When you take out a loan using your house to guarantee repayment, a federal law, the Truth in Lending Act, gives you three days to reconsider and cancel the loan without any penalty. You must be given two copies of a form explaining this right to cancel, with an explanation of how to cancel the loan. Read more about the FTC Consumer Alert, Home Equity Loans: The Three-Day Cancellation Rule. You do not have this right if your mortgage is for the initial purchase of your home. If you are refinancing your home, then you do have this three-day right to cancel. In addition, Ohio law also gives you a three-day right to cancel a home solicitation sale. What is a home solicitation sale? A home solicitation sale is a sale of goods, such as
