Diana Metz`s Finance Blog

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A fast home equity loan can be a perfect aid (or a significant hindrance on the other hand), subject to how you put the proceeds to work. Like other financial matters, it ultimately comes down to discipline. If you take out a loan and blow it on a new sports car, you will not be happy when the bank takes your house for failure to repay your home equity loan.

Before you apply for a home equity loan with your home equity lender, you should first know when they might be useful.

As a homeowner, you own a major asset in your property. And if you have owned the house for some time, you have an appreciated asset. Most lenders will allow you to borrow against this equity subject to certain limits. In most cases, lenders will underwrite loans up to say 80% loan to value.

But if you take out more than you need, you could put yourself in a bind. So never borrow more than you need right now. Otherwise, you will end up paying interest that you should have never been paying to start with.

But are there instances where some cash will fulfill an urgent need? Unfortunately no matter how well we plan, there will always be a stumbling block somewhere in our financial lives. Here are five good reasons you should consider a fixed rate home equity loan:

Home repairs

Business capital

Job loss

Investments

New car (provided you do not otherwise qualify for a lower interest rate elsewhere)