A home equity loan is a loan that is taken out on the equity you've built up on your home. The money gotten via the home equity loan can be used for whatever you want, but the catch is this: in the event that you cannot repay the loan, you will very likely lose your home to the institution that loaned you the money. There are two types: fixed and adjustable.
Fixed are exactly what they sound like: a fixed interest rate that never changes. This can be both good and bad. It can be good because you will always know what your monthly loan payment will be. This is good for people who need to budget their money and like to know exactly what they need to set aside each month for bills. On the other hand it can be bad because you run the risk of paying far more on your loan than you could have if you got an adjustable interest rate.
Adjustable are also exactly what they sound like: adjustable. Home equity loans are basically second mortgages and interest rates on mortgages are governed by an interest index, banks and the government. The market is tracked by experts and as the market changes so do the interest rates. If you chose to get an adjustable rate, you will always be paying the interest rate that the market says you should. Unfortunately, if you choose to go with this type of loan it will be hard for you to budget. As the interest rates vary so will your loan payments. You will not know how much to pay each month until the bill comes. This will make it very hard for you to know how much money to set aside each month.
You can use the loan for whatever you want, but make sure that you do your research and choose the right for you. Don't let yourself get talked into anything that you don't feel comfortable with. Both types of loans have their pros and cons.
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