Many lenders in the past have offered home equity loans and lines of credit to borrowers. When you use a home equity loan or have a line of credit, you are tapping into your homes value. With home equity loans you take out a second mortgage that is separate from the original mortgage loan. The home equity line of credit, gives you access to credit whenever you need it.

Having a home equity line of credit is just like having a high limit credit card. The difference, when you use it the equity in your home decreases, which is a major fallback of home equity loans. So when is using home equity okay? Personally, I would say never. However, I'll be objective and unbiased and just give you hard facts about home equity loans. After knowing the facts about home equities, you can determine if it is okay to use your home equity.

Depending on your financial situation, you may be able to deduct the interest from the home equity loan. However, before making the decision to apply for a home equity loan, consider cautiously the costs of a home equity line versus the tax benefit. The most important thing to remember about a home equity loan or line of credit-if you do not repay the home equity loan, you can lose your home.

Currently, due to the current housing market, some of the biggest mortgage lenders want to know how much customers owe on home equity loans. The mortgage lender's concern is how much homes are worth in relation to the home equity loans. Also, mortgage lenders are now starting to examine home owner's lower credit scores and payment habits. If you have a low credit score, a home equity loan is not recommended. Lenders are making the decision to cut off home equity loans to many customers. So, when are home equity loans not okay and when are home equity loans okay?

When a home equity loan is not okay:

• If you are over extended in credit card debt and your credit score is low.
• When you are already struggling to pay your current home mortgage.
• When you are living paycheck-to-paycheck.
• When you are using home equity like a credit card for items you do not need .

When a home equity loan is okay:

• When your financial situation is good and you are not living paycheck-to-paycheck.
• When you comfortably have the income to pay back the home equity loan.
• When you have good spending habits, and the discipline and self-control to use home equity responsibly.
• In the event of a health crisis, job loss or divorce-better to tap into home equity than lose the home all together

Keep these important guidelines below to follow when you are considering a home equity loan.

What is the interest rate? Is this a fixed rate home equity loan? It is highly recommended that if you intend to get a home equity loan to get a fixed rate loan. And know the terms for repayment.

Education and research is the greatest tool when considering a home equity loan. It's a fact, the more information you know about home equity loans the better.

Sharman Lawson is a financial coach, speaker, and author of the book 12 Steps to Eliminate Debt Forever! Visit her website at www.sharmanlawson.com.