Home Equity Loan and Credit Insight, by Home Equity Loans Editor

Borrowing against your house may be a good thing if you are looking to get some money to pay off a debt or pay for college  BUT borrowing against your house in the form of a home equity loan mortgage means that you will have to put your house on the line as collateral –  This means that the home equity credit that you get from home equity lenders has to be paid off properly, on time and in full in the long run.  Otherwise, you can expect to lose your home if you are not careful with the payments.  Here is some advice about a home equity loan line of credit, for only when you are in need of it.

It’s for the banks – When you are looking for home equity lenders, the best ones are usually from the banks.  But you have to know that home equity lines of credit will not only benefit you, they will benefit the banks.  In fact, the banks will have more to gain when it comes to your applying for a home equity loan, regardless of whether it’s a fast home equity loan or a fixed rate home equity loan.  When you get into such a transaction, you put your house on the line.  And while your house is on the line, you will need to make payments with an interest rate added just so that you can keep your house.  Of course, the home equity loan rates are not that high but the risk of not being able to make payments is pretty high.  This is a tough decision that you need to make for you and your family so remember that it is not only you who will benefit from a home equity line transaction.

Know the loan types – There are only really two types of home equity mortgages that you need to know about.  The first kind of home equity loan is one where the bank will give you a certain amount that you need in lump sum.  This means that you will be getting the whole amount that you intend to borrow and you can spend it in any which way you like, whether it’s for home improvements or consolidating debts.  The other kind of home loan is the kind that allows you to use it like a credit card.  The home equity line of credit gives you access to a certain limit of credit that you can use for anything.  And when you make the payments, the credit is freed up so that you can use it again in the future.  Both have their advantages and disadvantages and it’s up to you to figure out what is the best for you.

Know the rates – When you are shopping for a good home mortgage or a home refinance loan, be aware that it’s all about rates. Interest rates are what banks are after when you make the home loan payments back to them.  Make sure that you know the home loan rate from each of the lenders that you go to so that you can pick the lowest or what you think is best for you.