To understand what equity rates are a short description about home equity loans is required. An equity loan is like a second mortgage, if you own a house and have already paid off a part of the loan you have the possibility of applying for a home equity loan. The quity of you home is the amount of value you have already paid off on your home. Let's say your mortgage is worth $150,000 and you have paid off $75,000 then your equity is about $75,000.

There are normally 2 types of equity loans. The first type is the fixed home equity loan. With this type of loan the equity rates are usually fixed because you borrow a fixed amount and everything is arranged at the moment you sign the papers. There are no surprises here, you know how much you have borrowed and what the equity rate was at that time. You know how much you need to pay off each month and for how long. Home fixed equity loan are often tax deductible.

The second type is called the home equity lines of credit. This works more like a credit card. If your home equity is $75,000 then that amount could be your credit line. If you only need $5000 then you can withdraw that amount from your account and your credit line will be left with $70,000. This type of equity loans work best if you don't need a large sum of money. You need to keep in mind tough that the equity interest rates will fluctuate with this type of loan. Whichever type of home equity loan you decide to take always remember to look for the best equity rates. A fixed home equity loan will often have equity rates that do not fluctuate but not always, this depends on the contract and the lenders terms of service. A home equity line of credit will have variable equity rates almost every time.

However you look at it a home equity loan is a major decision in your life and should not be taken lightly. Always remember that the money you are lending needs to be paid back and in reality belongs to the bank. If you can't pay off the loan your home will belong to the bank also. Look at what happened in the USA with the variable equity rates. You can never be informed enough, always read the fine print.