How to File for an Equity Line of Credit

An equity line of credit is basically a second mortgage on your home.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Accounting Services
• Banks
• Home Equity Loans
• Personal Financial Software

1. Determine the need for the home equity loan. Is this really something you need?
2. Locate a reputable home equity loan company through your current bank or mortgage company, referrals, the Internet or the yellow pages.
3. Arrange to have your home appraised by the loan company.
4. Get more than one appraisal. Many companies give appraisals for minimal or no fee.
5. Choose a company with the best loan rates and the best loan provisions.
6. Complete paperwork and start making monthly payments on the loan.

Tips & Warnings

• A home equity line of credit is like receiving tax-free cash. If you don't plan on selling your home and it increases in value, you can get a new line of credit every couple of years.
• Look to obtain your home equity loan from an institution with which you already have a relationship. It has all of your account and personal information, which will make the loan process much simpler.
• If you don't make payments, the bank can repossess your home.
• Make sure you adequately consider all of your options before deciding to apply for a home equity loan - it is essentially a loan that uses your home as collateral.