Home equity loans in the US are a popular way for homeowners to get cash out of their houses. You can use the money from US home equity loans to finance a business, clear up credit problems or pay for college. Some people use the cash for home improvements like additions or landscaping. An added benefit to a US equity mortgage is you typically deduct the interest you pay for taxes.

With home equity, US lenders offer loan terms from ten-years to 30-years. A 15-year note is the most common term for US bank home equity loans. The lower the term, the higher your monthly payment, but the less interest you pay over time.

While equity loans seem like a good way to get cash, borrowers need to be careful not to overextend their finances. Some of the downsides of a home equity loan include:

1. Using your home to secure the home equity loan
2. Converting short term debt into long term debt
3. Increasing your monthly payment mortgage payment

Action Steps
The best contacts and resources to help you get it done

Get an honest appraisal for your home's value

Some US home equity loan lenders use appraisers based in CA to appraise property in order to get a higher value for your home. While this allows you to qualify for a larger amount of money, it may leave you upside down on your house if you try to sell before paying off the home equity loan.

I recommend: Find an appraiser in your state by using Appraiser Finder’s Statewide Appraiser Search. AppraiserMatch works quickly to find you an appraiser located in your state.

Calculate the payment for a US equity mortgage

Many people take out a US home equity loan without looking at the long term debt and interest paid or their annual household budget. With home equity, US lenders may foreclosure on your home if you can't afford to make the minimum payment on your loan.

I recommend: Make a budget with help from CNN Money. Use Bank Rate’s home equity calculator to find the payment. Remember to add that payment to your first mortgage to determine the actual house payment you need to make each month.

Consider if a US home equity line of credit would work better

A US home equity line of credit works similar to a credit card. Banks establish a limit based on the equity of the home and the borrower must pay interest once they tap into the line of credit. Don't take out a line of credit unless you need to; some banks look at a home equity line of credit as a negative point should you try to refinance your mortgage.

I recommend: US home equity lenders generally work with both lines of credit and a US home equity loan. Compare the closing fees and interest rate of a home equity loan with the interest rate and minimum payment on a line of credit. Lending Tree provides you with four quotes from different lenders to help you get the best deal possible. E-Loan strives to be radically simple to help you understand the lending process and get the best rates.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Don't max your credit cards out again if you use a US home equity loan to consolidate credit card debt.
• •  Talk with the bank that handles your personal account to see if they offer home equity loans.
• •  Leave some equity in your home to compensate for swings in the housing market.