Questions You Should Ask Before Getting a Home Equity Loan

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FDIC Consumer News - Summer 2005 - Home Equity Product Questions

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A Shopper's Guide to Bank Products and Services

Questions to Ask About a Home Equity Product


Do I really need this loan?

Consider all your options before you use your home as collateral for a loan.


Can I afford the loan payments?

Find out how much the payments will be and decide if you can afford them. Remember, if you decide to get a home loan and you can't make the payments, you could lose your home.


What if interest rates increase?

Find out what the interest rate will be on your loan. If it is a variable rate, find out when the rate may change and by how much. Ask yourself if you can afford increased monthly payments when interest rates rise. Beware of loan terms and conditions that may mean higher costs for you.


What will I use the loan to pay for?

If you decide to tap into your home's equity, you should try to invest in assets with long-term value, such as a home renovation project. Using a long-term loan to finance a short-term asset, such as a car that will have to be replaced in five or six years, means you could still be paying for the item even though you no longer own it.


Also see:

  • Mortgages - Questions You Should Ask Before Getting a Mortgage Loan.

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FDIC Consumer News is published by the Federal Deposit Insurance Corporation


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Last updated on 5/17/2005

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