How to Get a Home Equity Loan

A home equity loan allows you to tap into the equity in your home to pay for improvements, education, a car, a vacation - it's up to you. And the best thing is, the interest is tax deductible.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Real Estate Brokers
• Online Mortgage/finance Services

1. Make sure you have sufficient equity in your property to draw upon.
2. Contact your financial institution. You already have an established relationship with this organization, and it will likely want to keep you as a customer.
3. Contact other local banks or savings institutions that specialize in home equity loans.
4. Ask a local real estate mortgage broker to recommend lenders.
5. Search for a lender online.
6. Decide if you want an adjustable or fixed interest rate. (Depending on your credit, your loan-to-value ratio and the lender you choose, you may not have a choice.)
7. Complete the loan process.

Tips & Warnings

• During the loan process, the lender will have to order an appraisal to determine the value of your property. Although you may not have to pay for the appraisal up front, the cost will run from $250 to $350, depending on where you live.
• The home equity loan is typically a second mortgage and therefore more risky, so the interest rates will be higher than for a first mortgage.
• Even if you don't complete the loan transaction, you may still be responsible for the cost of the appraisal, credit report and any other fees incurred by the lender or broker.
• Understand that the home equity loan is secured by your home. Failure to make payments according to the agreement could result in foreclosure.