One of the most popular forms of lending in the country is the Home Equity Loan. Lenders love them because they are so profitable. Borrowers love them too. Do you suppose there is one with your name all over it, one that is just right?

There are probably 20-30 variations of the home equity loan. The two most popular types of home equity loans are called "open" and "closed." The "open" loan or a line of credit sometimes called a HOME EQUITY LOAN LINE OF CREDIT or HELOC. In this loan usually the interest rate is variable tied to the prime rate and the term of the loan can range from five to thirty years. Because the rate is variable the payment amount is as well which might be problematic. Lenders often offer a special introductory rate as an added incentive. Usually loan closing costs are waived and the application process is limited to ability to pay, credit score, length of time in the house and a drive by appraisal-so a relatively simple process.

The other type of loan is a "closed" loan where the amount is a fixed amount for a fixed period at a fixed rate with set payments so at the end of the term the loan is paid off much like a regular installment loan.

Both loans are secured by second mortgages on the property. The terms of these loans can range from five to thirty years. They are almost always shorter than a first mortgage loan.

Home equity is the difference between what your home is worth and the amount you owe on it. For most homeowners their home is their biggest asset and it usually represents a treasure trove of cash. In 2005 the value of home equity across the US was $11.3 trillion.

One of the variations which has broad appeal is the 125 HOME EQUITY LOAN so designated because the borrowers can get up to 125 % of the current combined loan to value (CLTV). This type of loan is particularly appealing to first time home buyers who may need to spend extra money on furniture, home improvements, landscaping, etc. The extra money can be used for debt consolidation, medical expenses, or college tuition as well.

The rates and term of the loan are usually fixed but because the extra money is unsecured the rates are generally higher than a regular first or second mortgage rate but still lower than credit card rates. This type of home equity loan is good for someone planning on staying in the house for a long time while the home appreciates. If appreciation does not catch up or surpass the amount of the mortgage the home owner will be "upside down" when they sell i.e. they will owe more than the property is worth.

There is such a wide variety of loans you can get using the equity in your home as collateral that it can be confusing. But if you do a little research you can find one that is just right for you and your needs.