Home equity loans are loans that are secured against your home. They’re available to those who own a lot of property and whose wealth is locked up in that property. They’re an attractive loan option for many people, as the interest is tax deductible and the rates are usually considerably lower than other loan options. Home equity loans are generally pretty easy to obtain as well.

However much you are able to borrow through a home equity loan depends upon the amount of equity in your home. For example, if your home is valued at $200,000 and your mortgage balance is $50,000, then your equity is $150,000. Home equity loans allow you to borrow up to 80% of your equity. In this case, you would be able to borrow up to $120,000.

The amount you borrow can be used for virtually anything. However, if you choose to use the money on vacations, purchases, and other expenses, you may be counting on your home to appreciate over time. This can end up causing you worry and anxiety. If your home depreciates or the real estate market is not booming, then you may end up becoming “upside down” on your loan. This means that you owe more than your home is worth, which can put you in a difficult position. This can cause serious financial problems or force you to stay in a home that you would rather sell and move out of.

For this reason, home equity loans are best when used for home improvement purposes. If you make improvements upon your home that will increase the value of your property, then you are using your loan wisely. This could mean adding another bathroom, renovating the kitchen, or adding another bedroom or living room to your home. Some improvements like swimming pools generally do not increase the value of your home.

Keep in mind that when you take out a home equity loan, you are using your home as collateral for your loan. If you fail to make repayments, then you risk foreclosure on your home. This is when the lending company takes ownership of your property and sells it in order to repay your debt.

Regardless of your financial situation, you should check out the home equity loan comparisons available at Totally Money. The site will ensure that you get the best home equity loan that is possible.