Tips for Tapping a Home Equity Loan

Compare the rates. The rate you'll be offered on the home equity loan depends heavily on your credit score.

• If you have an excellent score of 760 or above, you should be able to win a home-equity line of credit for half a point below the prime rate

• Avoid the fees. If you have decent credit, you shouldn't have to pay any application or appraisal fees to borrow against your home.
  Know the tax rules. You have to be able to itemize, which most taxpayers can't do because they don't have enough deductions.
  Know what you're risking. Every dollar of equity you borrow is a dollar that can't be used to buy your next home when you're ready to trade up or to pay off credit cards or other short-term debt.
  Keep some headroom. You should try to keep a cushion of at least 20% equity in your home.