Home Equity 101

Borrowing against the equity in your home can open doors for you to make home improvements, get rid of credit card debt, pay off student loans, buy a new car, take a dream vacation and much more. The interest rates are relatively low too, especially in today's economic climate.

Use a home equity loan to your advantage
You've worked hard for your home. Now it's time to put your home to work for you with a home equity loan.

Did you know that the number one reason people request a home equity loan is to make home improvements? By making upgrades or repairs to your home, you can increase the fair market value while giving your home a brand new look. Whether you plan to re-sell soon or live there for years, home improvements can make a big difference in the total worth of your home.

Debt consolidation is the second most popular way homeowners take advantage of their home's equity. Many people are overwhelmed by credit card debt and a home equity loan or line of credit can give them the help they need.

They can borrow money at an interest rate that's less than the rate they are currently paying, so they can pay off the amount faster and avoid high interest fees. Also, the interest on a home equity loan may be tax deductible. (Be sure to check with your tax advisor.)

How do I get the best rate?
Although today's rates are the lowest they've been in years, there are some other ways to bring those rates down even further on a home equity line of credit.

• Auto debit. You'll often receive a rate discount if you automatically debit a set amount each month from your credit line. This amount can be used to pay bills, car payments, home repairs and more.
• Immediate utilization. Some lenders give you a rate discount if you agree to use your line of credit as soon as it is issued.