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     A home equity loan is simply a loan against the equity in your home. These can be a great strategy for financial help, but also potentially troubling.
     There are primarily two types of home equity loans. One is a straight loan that has a designated term of length to repay. The other is a flexible line, which may be attached to your checkbook and you can borrow against it and pay it back tomorrow. It remains available for when you want to use it again.

PROS of Home Equity Loans

-Generally easier to get, depending upon equity and other basic loan factors.
-If approved or a flexible line of credit, it is ready for immediate use.
-It gives you financial help to squeeze cash use tighter as you still have a buffer with your equity line that you can spend available cash verses paying a higher interest rate from being forced to borrow.
-May be tax deductible
-Can be a tool for building credit if used properly
-It can be a financial lifesaver for emergencies or opportunity purchases.
-Equity loans can be used to consolidate other debt payments to help reduce interest and monthly payment costs.

CONS of Home Equity Loans

-Equity loan can become a trap if used to continuously bail yourself out of other debt. It could create a spiral to where the well goes dry, and you have no money left
-Unfair fees and charges may be charged. Read your terms carefully. Some lenders charge a $10 fee or more each time an automatic draw is made on your home equity line versus having you physically come in each time you want to use it.
-You must be disciplined. Just because you can get the money does not mean you should. Poor spending and borrowing habits can strip one of your most precious assets of its equity.

The Bottom Line

-A home equity loan is like a sharp tool. It is an incredibly awesome tool when used properly and incredibly dangerous weapon if not.

Home Equity Loan

Make sure to check out our Free Financial Calculators for help in deciding if an equity loan may be right for you.

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