There comes a time when a homeowner needs to have money quickly for an emergency situation, usually for medical bills or a major repair problem in the home, that needs immediate attention. The only way to get this money without using high-interest rate credit cards, is through one of the home equity loans offered. Home equity loans are second loans on your home. Taking out these loans means you now have two mortgages to pay. Failure to pay either one can result in foreclosure. Care should be taken as to how these loans can be repaid and a thorough search for the best interest rates available would be helpful. An difference of a point on a loan for a large amount of money adds up, which requires you to use a mortgage calculator, to break down the payments on a loan at various interest rates.

Home equity loans exist in two categories. A fixed loan, where your interest rate will stay the same the entire span of the loan. Fixed home equity loans will require you to pay similar closing costs as with your first mortgage. An application fee, origination fee and sometimes points can be paid to bring the interest rate down. A point is a percentage of the amount borrowed. If you borrow $100,000, one point equals $1,000. As with all loans, it would be foolish not to hire an attorney to go over the specifics. These loans have a definite termination date. Fixed rate loans are for people who know exactly how much and for what purpose they are applying for this loan.

The second type of loan is called the line of credit home equity loans. With this loan no closing costs are charged, though it would be incumbent upon you to hire a good attorney. The interest rate on this type of loan is variable, meaning it can go up or down at set intervals. Your attorney will know what the 'cap' is, or the maximum permissible increase in the interest rate over a specific time. In this loan you have an amount of money at your disposal that you can draw upon as needed. Make sure these home equity loans are used for essentials, not for raising your standard of living with a new SUV or home entertainment center.