HELOC displayed on a mobile phone screenHome equity loans allow homeowners to get loans using their home’s equity as their collateral. There are two types of this kind of loan; home equity and home equity lines of credit, abbreviated as HELOC. These loans are primarily a second home mortgage that allows you to turn your equity into money.

home equity loan here in St. Louis, MO permits you to get loans at low-interest rates and possibly qualify for tax deductions. Tapping into your home’s equity is, however, something you should do cautiously to avoid losing your house.

Here are some smart moves when tapping into your home’s equity.

Select your type of equity loan wisely

Home equity loans allow you to get a lump sum and refund it over a fixed period at a fixed rate of interest. A HELOC makes a specific credit amount available as necessary for a specified period followed by a repayment term with adjustable interest rates.

The changing interest rates of HELOCs can cost you more than the fixed rates of home equity.

Limit the use of your home equity

It is unwise to cash out on your equity because it is accessible. Home improvements, college expenses and debt refinancing and buying of property are some ideal ways of using home equity loans. Have a good financial plan in place before tapping into your equity.

Use your equity to reduce interest payments

A widespread use of home equity loans is decreasing other debts that have high-interest rates. This is only a smart move if you can repay the loan in a short time and you possess the financial self-control to alter your spending behavior. This way you do not run into more debt and lose your house.


Ensure you comprehend how a home equity loan works before taking one. Collaborating with a good mortgage broker to help you with your decision will be beneficial. When done right, home equity loans can be your key to financial freedom.