The first consideration you have to make before going ahead with a home equity loan is whether you can really afford to add to your current debt. Assuming that your job is stable, calculate whether it will yield enough money for you to be able to repay the loan. If your job isn't stable, consider how you'd be able to repay the money. Credit counseling agencies can prove a valuable resource when deciding whether to take out a second mortgage.
One of the most important parts of a home equity loan is to borrow only what you need. Don't get more than you can afford or have an immediate use for. Don't take a loan for more than your house is worth, and try never to get into debt for more than 80 percent of your house's value.
If you conclude that you're going ahead with a home equity loan, compare your options. Research the various banks in your area and ask people you know who they worked with in the past. Some lenders are less reputable and sometimes even prey on weaker clients, tricking them into taking on unfavorable terms. Keep an organized chart of what the different lenders offer, including all fees and variables. Remember that negotiations will help you get a better deal; let potential lenders know that you're talking to other banks and try to bargain them down to more competitive rates, fees and points. Carefully examine any forms you're given and make sure to ask questions about anything you don't understand or don't like. If you know any accountants or tax attorneys, have them look over the estimate and forms for you. Before you sign anything, double check that the final loan agreement is the same as the rough drafts you were given. If not, compare the changes. Don't sign an agreement with blank fields; if they're supposed to stay blank, put a line through them and initial them for your own protection.