| When
faced with a significant expense, such as medical costs, a new addition to your
house, or a child's college education, you may find that you don't have the necessary
cash on hand. In such a situation, you may want to consider a home equity loan
or line of credit. By
using the equity in your home, you may qualify for a sizable amount of credit,
available for use when and how you please, at an interest rate that is relatively
low. Furthermore, under the tax law -- depending on your specific situation --
you may be allowed to deduct the interest because the debt is secured by your
home. Before
deciding whether to head down this road, you should carefully weigh the costs
against the benefits. Shop for the credit terms that best meet your borrowing
needs without posing undue financial risk. And, remember, failure to repay could
mean the loss of your home. There
are actually two variations on this home equity theme: lines of credit and loans.
When comparing the two, however, keep in mind that you cannot simply compare the
Annual Percentage Rate (APR) for a loan with the APR for a home equity line because
the APRs are figured differently. The APR for a loan takes into account the interest
rate charged plus points and other finance charges. The APR for a home equity
line is based on the periodic interest rate alone. It does not include points
or other charges.
Article
continued at http://www.fool.com/homecenter/refinance/refinance02.html | 
