Check monthly payment at all interest rate levels so you don't experience sticker shock The rate you are quoted up front and that is calculated for first couple of payments is usually a teaser rate. Get a quote for what your monthly payment will look like when you are paying lowest interest rates around, and what your monthly payments will look like when you are paying highest interest payments. You can get an adjustable rate mortgage quote from almost every lender on market.

Ask lots of questions and get lots of figures written down on paper so you won't be surprised as rates fluctuate. Also, there's usually a built in cap. The highest possible rate is quoted in contract and can still end up being lower than market index.

Try to get a professional appraisal before and after your home improvement project to make sure that you will see in an increase in value of your home. You don’t want to spend $50,000 to see an $8,000 net increase in value. This is not best way to use your home equity loan. Educational loans and large medical bills can also be financed with a home equity loan if they are a one time, large expense.

The third criteria for getting a home equity loan is that debt should be high interest. Usually credit cards bills are first source of high interest debt in average household. But, what if you’ve got a great card with a $3.9% rate for next two years?

This is definitely a pretty low rate that you can handle with a payment plan. Some schools loans, small business loans and personal loans would also carry a much higher interest rate than you could receive on a home equity loan. These would also be good candidates for a one time home equity cash out to eliminate high interest rates.

Regardless of type of debt that you are trying to finance, a home equity loan is one cheapest and most effective way to exchange large, high interest debts for a consolidated, low interest loan.