 TITLE: How Does a Home Equity Loan Work? CONTENT: Home Equity Loan Alternatives\n-----------------------------\nAs helpful as home equity loans can be, it's worth looking at viable alternatives:\n*   **Take out a personal loan.** Most personal loans are unsecured, so you can avoid using your home as collateral. Although the interest rates won't be as low as they would with a home equity loan, as long as your credit scores are high, the rate may be low enough to make it worthwhile.\n*   **Find money in your budget.** If you can reduce your expenses or sell unnecessary personal property to afford what you want, you can keep your home's equity intact.\n*   **Liquidate savings and investments.** You may want to hoard the cash you've saved or funds that are growing in investment accounts, but weigh your options before you borrow against your home.\n*   **Use a HELOC.** Maybe you don't need a large lump sum but are better off with a flexible cash flow. In that case, a HELOC may be preferable since it gives you the option to borrow only what you need.\n*   **Consider cash-out refinancing.** Another option is to refinance your mortgage at a lower rate and withdraw cash at closing. The new loan will be higher than your current one since the amount you take out (plus any closing costs) will be added to the loan.\nWhen you need a big influx of cash all at once, a home equity loan can be a good resource. You'll want to get the best rate possible, which means having a credit report that's populated with positive information. Check your credit report and credit score, which you can do for free with Experian, several months before applying. If you spot fraud or inaccuracies, dispute them, and if you've missed payments or your credit utilization is too high, take the time to make changes that will help you improve your credit score. END