More and more lenders are offering home equity lines 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.

If you are in the market for credit, a home equity plan may be right for you. Or perhaps another form of credit would be better. Before making a decision, you should weigh carefully the costs of a home equity line against the benefits.

Most home equity loans have fixed interest rates that are much lower than credit card debt. Interest on home equity loans can be tax deductible. See Mortgage Deduction Section.

With a Line of Credit, you have the ability to use these funds for whatever you need. You will only pay back on the amount you actually borrow.

Here is an example:

Let's say your home is worth $500,000 and you have an existing first trust deed in the amount of $400,000 which is 80% of the value of your home. You can take out a Home Equity Line of Credit for up to $100,000. (100% of the value of your home.) (The total amount you can take is based on your credit and debt.)

Now, you have an equity line of up to $100,000 and you need to use $25,000 of this credit line to make home improvements. The loan payments you will make are based on $25,000 not on the full $100,000. So, it is used basically like a credit card. You only pay on what you use.

You can use the loan for almost anything; however, many people use home equity loans for home improvement, debt consolidation, purchasing luxury items, or paying for college.

If you own a home, using the equity you have built up may be one of the most cost-effective ways to finance a home improvement project. And in many cases, home equity products can offer you a lower interest rate as compared to other types of loans.

* You'll need to compare these costs, as well as the annual percentage rate (ARP), among lenders.
* Interest rate charges and related plan features
* Costs of establishing and maintaining a home equity.

Choose this if:

** You want a shorter loan life and lower rates
** Low monthly payments are not a priority
** You're planning to remain in your house less than 10 years

Many homeowners and homebuyers worry about the possibility that home prices could fall where they live, causing them to lose money on the resale of the home. Home Equity Protection (HEP) allows you to buy or stay in a home with the confidence that you will be protected if home prices decrease in the area where you live.
HEP provides financial protection to you in the event that home prices decline in your ZIP code between the time you purchase the protection and the time you sell your home, in exchange for a one-time fee. When you purchase Home Equity Protection, you tell the program how much your home is worth. (That becomes the Protected Value of your home, on which your protection is based). When you resell your home, HEP pays down your mortgage (or pays you directly) if home prices have dropped in your ZIP code.

Home equities are available for a 1 to 4 family residential unit, which is owner occupied as a primary residence. The credit union does not offer home equity loans on a property that is being purchased on contract.

The minimum loan amount is $10,000 and the maximum loan amount is $125,000.

A mortgage add-on lets you use your existing home equity as a source of funds by adding to your current Mortgage.

If you are planning to stage your renovations over a longer period of time, a secured Royal Credit Line could be the ideal solution.

If you have paid off some or all of your mortgage, or if your home has increased in value, you may be able to re-mortgage it for the amount of money you want for your renovation.