2. Con: Your House Is Collateral for the Loan

Yes, that's the reason the interest rates on your home equity loan are so low. However, if you should fall into financial difficulty and default on your loan for any reason, your lender has the option to file for foreclosure and take your house. It's possible that you could lose a home worth, say, $500,000 because of failure to make payments on a $30,000 loan. It's important to understand this risk before you enter into a home equity loan.


BackyardProduction / Getty Images


More on Facty


This site offers information designed for educational purposes only. The information on this Website is not intended to be comprehensive, nor does it constitute advice or our recommendation in any way. We attempt to ensure that the content is current and accurate but we do not guarantee its currency and accuracy. You should carry out your own research and/or seek your own advice before acting or relying on any of the information on this Website.