There are two ways to borrow against the equity in your home. The first is a home equity loan, which pays the entire amount borrowed in a single lump sum. The interest rate and payment schedule will be about the same as a second mortgage. You may be able to find a lower rate by choosing an adjustable rate plan. The second way to borrow against equity is a home equity line of credit, which establishes a limit you can borrow (as defined by the equity in your home) and allows you to withdraw funds as needed up to that limit. Repayment and interest rates for this type of loan are also essentially the same as a second mortgage. The drawbacks of these loans against the equity in your home are that you are putting your home on the line as security for the loan and a declining housing market could result in debts greater than the selling price of your home.

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