Lastly, know where you are going in next 10 years. Sure, you may be able to swing second mortgage now, but where will you be in 10 years. While nothing is ever certain, there are a few life altering events that could drastically change your finances. These include:

1.A spouse changing jobs or deciding to quit working to stay home with children

2.A spouse or child attending college

3.The birth or adoption of a child

4.Illness or death in family

So make sure to discuss your current situation with your friends and loved ones. If you plan on having another child or moving to one income, you may be better off waiting for a while. On same note, if you or your spouse will graduate college or receive a promotion, you can probably go ahead with loan.

When time comes to decide on a loan product, do not get pressured into signing something that you don't understand. Even if lender says that document is "standard" read through it cover to cover before signing. The final piece of advice for you would be to not take more than you need. Let's say that you have about $5,000 in home repairs that need to be done. Even if lender says that you can borrow $30,000 dollars, you shouldn't do it. Borrow only what you need. That way, you can be sure to repay loan in a timely fashion. Put any excess money into a savings or money market, so that you have a cushion should another emergency arise.

3. Prepare yourself emotionally. A home equity loan seems like a simple way to get needed funds. But, it is important to remember that you have something major on line with this type of loan. Your home! If you fail to repay your home equity loan, they could take your home. So, it is important that you discuss process with everyone involved so they understand what this loan entails. Set up a budget for a few months prior to closing, and set aside extra monthly payment. You will also want to consider any life-changing events that may happen during life of your loan. Are you planning on having a child? Changing jobs? Etc. All of these factors can alter your ability to repay your loan.

4. Do your homework. Knowledge is power. Make sure that you have all of facts when it comes to choosing a lender and a mortgage program. If possible get information from several lenders, so that you can make an educated decision as to which one is best for your particular situation.

5. Get your break from Uncle Sam! In most cases a home equity loan is tax deductible. So, make sure to keep all paperwork associated with your loan, including closing cost allocations. You may be able to deduct both interest and principal in some cases. Consult with your tax professional to find out how a home equity loan will affect your tax situation.

With a little bit of time and effort, you should have no trouble finding right home equity product for your specific needs. By planning ahead and researching your options, you can rest assured that you made best possible choice for you and your family.