Home equity basically the value of your home minus what you owe on your mortgage.  Home equity loans allow you to borrow that money and your home’s equity is the collateral.  If used properly, home equity loans will actually help you build your home’s equity.  They are great if you plan on using the money to reinvest them back into your home.  By reinvesting the money back into your home, you in turn raise your home’s value. 

Home equity loans are basically second mortgages on your home and allow you to turn your equity into cash.  Home equity loans are generally paid back in a shorter time frame than your home’s first mortgage. Most first home mortgages are paid back within 30 years while a home equity loan may be paid back in 15 years. 
 
The cash received from home equity loans are great for purchases that are going to have to be paid back over a longer period of time anyways.  They are great for home improvements that are rather large like additions to your home, remodeling a kitchen or bathroom.  These are typically expensive renovations and the use of a home equity loan allows you to pay them off over a longer period of time than a regular bank loan.  Other uses of home equity loans are for college educations for your children.  You can withdraw the amount of money that you plan on the education costing and pay for the education over time.  At the same time you will be able to pay off the loan in a longer amount of time. 
 
During the repayment period of the loan you are not allowed to add any new debt to the loan, which makes it great for projects and education.  The interest rate is fixed from the time you borrow and you cannot borrow any more from the loan.  You have to decide how much you need or are going to spend and stick with it. You will also be able to enjoy fixed payments over the life of the loan.
 
Home equity loans are great if used responsibly and on large projects that you know you will need a lump sum for.   You may be able to increase your home’s value or your children’s education opportunities.