Before entering into a home equity loan, think about how you will pay back the money you borrow. Some plans set minimum payments that cover a portion of the principal plus accrued interest. But unlike with the typical installment loan, the portion that goes toward principal may not be enough to repay the principal by the end of the term. Other plans may allow payment of interest alone during the life of the plan, which means that you pay nothing toward the principal. If you borrow $20,000, you will owe that amount when the plan ends.

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.