Be careful when getting a home equity loan. You could find yourself paying hundreds of dollars to establish the plan. If you were to draw only a small amount against your credit line, those initial charges would increase the cost of the loan. Because the lender's risk is lower than for other forms of credit, since your home serves as collateral, annual percentage rates for home equity lines are generally lower than rates for other types of credit. The interest you save could offset the costs of establishing and maintaining the line. Moreover, some lenders waive some or all of the closing costs.

The best way to know if you are getting a good deal on a home equity loan is to compare different loan plans. Be sure and compare interest rates, late fees, and the general terms and conditions.