The equity you have built up in your home since the time of purchase, provides a viable alternative to other types of loans for those with good credit ratings, who are considered financially stable. While you may be eligible to borrow up to 85% of the home's assessed value, less any outstanding amount on a first mortgage, you also need to become familiar with the terms before entering this kind of agreement.

For example, many institutions, when defining the length of the equity loan, set what is known as a "draw period", the timeframe in which you can withdraw the amount of the loan. There may also be minimum and maximum withdrawal requirements upon opening your account, and during the draw period. It is important to learn up front, what your options are for accessing the amount available to you, so that you know whether to have cheques available, or to carry a credit card.

At the end of the loan period, they may require full repayment of the amount that has been borrowed, or there may be a repayment plan over a fixed period. In some cases, you can renew your credit line, but if not, you will not be able to borrow further funds.

Not all home equity loan plans are created equal. Shop around and compare loan rates. While you're asking, check into lines of credit, equity lines and other loan options.