Remember those pesky closing costs when you first bought your house? Well there back in force when you apply for a home equity loan. They include but are not limited to following: Up-front charges, such as one or more points (one point equals 1 percent of credit limit), application fees, appraisal fees and closing costs, including fees for attorneys, title search, and mortgage preparation and filing; property and title insurance; and taxes.

Once recommendation before applying for a loan would be to have a plan in place describing how you intend to pay loan back. Some plans set minimum payments that cover a portion of principal plus accrued interest. Other plans may allow payment of interest alone during life of plan, which means that you pay nothing toward principal. If you borrow $10,000, you will owe that amount when plan ends. You’ll need to be aware of possibility of a balloon payment. This means whatever your payment arrangements during life of plan--whether you pay some, a little, or none of principal amount of loan--when plan ends you may have to pay entire balance owed, all at once. Failure to complete loan arrangement by making balloon payment could result in forfeiture of your house.

Finally federal Truth in Lending Act requires lenders to disclose important terms and costs of their home equity plans, including APR, miscellaneous charges, payment terms, and information about any variable-rate feature. You usually get these disclosures when you receive an application form, and you will get additional disclosures before plan is opened.

These simple guidelines were meant to provide you some additional information with hopes of making you more comfortable and aware of issues involved when applying for a home equity loan.

HO-6 – Designed for owners of co-ops or condominiums this policy provides personal property coverage, liability coverage and specific coverage of improvements to owner’s unit. Insurance provided by owner’s association normally covers most of actual structure. HO-8 – Home insurance policy for older homes that covers same perils as HO-1 but pays only for repair costs or actual cash value, since replacement cost could make policy costly. You will find that all of above home insurance policies are norm except for in Texas, where three types of additional policies can be purchased. They include: HO-A - Covers your home and possessions against named perils only, for actual cash value. HO-B - Covers dwelling for all perils unless excluded against all risks and contents against named perils. The house is covered for replacement cost up to policy limits, while contents are covered for actual cash value unless you buy additional replacement cost coverage. HO-C - Covers house and contents against all risks not specifically excluded by policy. Again, house is insured for replacement cost up to policy limits, while contents are covered for actual cash value unless you buy additional coverage.