Home equity loan as often called as a second mortgage. It will allow you borrow the sum of money by using the home equity. Equity is the value attached to an asset. You home equity would be the value of your house in the fair market minus any existing loan or mortgage on the same.
The home equity loans saw a boom in the year 1996 when it started providing a way to the borrowers to have the existing taxes circumvented in that year. Since it allow deducting the tax on the interest when it comes to tax returns.
Home equity loans are usually for 5-15years based on fixed or variable interest rates. Fixed interest rate loans are provided as a onetime payment which the borrower is supposed to pay over a set period of time. The interest is agreed upon by the borrower and the lender at the beginning of the loan. The benefit for the borrower here is that the payments and the interest rates do not change over the life of the loan.
Home equity loans are offered in the form of line of credit as well. It works more or less like a credit card. Some of the lenders do offer a credit card as well with the line of credit against the home equity. This allows a borrower to have a pre-approved credit line and borrower  can spend as much as he wants out of the credit line and repay it back. The payment of the loan is only for the amount that is used out of that credit line. Also the interest rate charged is as prevailing in the market. The end of the credit line period asks the customer to pay back the remaining amount in full.
Home equity credit is beneficial for borrowers as they get ready cash easily. The interest rate is much low as compared to the credit cards. The borrower gets money for debt consolidation, medical bills, education, investment etc.  Also the interest paid on the home equity loan is tax deductible which is not the case on credit cards. This allows the borrower save a lot of money. The borrower consolidates the debt and ensures lower payments and tax deductions.
Lenders have the benefit of earning interest and fees attached to the borrowed money. In case borrower fails to make the payments on time the lenders have the right to keep the initial payment. This is not the end. The lender will possess the property put as collateral for the loan and would do a foreclosure in public auction to recover his money.

When you are about to buy a house for the first time you often get scared of the mortgages and home equity loans. It may be because you do not have much time to go into it and do the necessary research or many of us consider it as a mistake which they do not want to commit.
It is agreed that first time home purchasing could be a bit more time consuming but if you do proper planning, this can be managed. You need a helping hand as well which I m sure you will find on internet. So in total home equity loans are not too rough.
I advise you to talk to a mortgages professional even before you go for house hunting. You may think that when the price is not negotiated and you do not have an idea how much you may want to borrow, what help can a mortgage professional could extend?
A “Pre Qual” which you get as a pre qualification letter, offered ot you once it is determined what is the amount you can afford and how much you can loan. This is done once your income and debts are considered, your employment and residence situation is evaluated, your available funds for down payments and required reserved have been screened and a few more things. This letter is to ensure you that the lender is confident and has assured a certain amount to offer you as a loan.
 This activity will help you in many ways. First it will let you know how much you can afford so that once you have zeroed in a house and ready to make an offer, you know to what extent you can offer. It is a confidence building measure as well.
Next the seller views you as a person carrying a suitcase full of money when you visit them since he knows that you are prequalified. He has nothing to worry about and you are not yet another guy who will waste his time. This makes sure that you now get the right deal as you are ready to deal right now. Online calculators can be used on different websites to get an idea of what you can afford.
It is always advised to be aware of what are you committing to and how you will be able to repay it. You need to do a lot of research and serious homework before you enter this. You should know what suits you the best. Fixed rate or adjustable rate. What is the duration you want the loan to be of. If there is any closing cost? What the kinds of fees involved in it. For how long are you planning to live in the house you are going to buy.

The home equity loan is offered against the market value of your home. Any existing debt is reduced from this value. Your home acts as collateral to ensure that the loan is secured and you will repay it. In the event you fail to repay this amount the lender has a right to foreclose the property and they usually sell  it in public auction.
An attempt to steal the equity in your home is home equity loan fraud. Swindlers do it in number of ways. They may come as a door to door sales person offering easy financing for your home improvements and repairs which your house might not need at that time. You get surprised when you have to pay monthly payments which are out of the line of your income and it may result into failure of payments and foreclosure.
Some gain the trust of the senior people and convince them to sign over the house to them. Or sometimes set up home equity loans. It may happen while refinancing. They forge your signatures on a blank “grant deed” to transfer the ownership of the property. They use the rest of the information from the public records.
 Federal Home Owners Equity Protection Act came into effect in 1995. It ensures that there is no unfair practice. If any of the prohibited terms are included in a home equity loan contract, it is unenforceable. Also the securities interest in the home is removed. The law allows a consumer to cancel the home equity loan contract in three days for any reason. Once loan contract is signed and received the notice of right to cancel then only the three days period would begin which must exclude Sunday.
To prevent any such mis happening with you make sure that you agree to a home equity loan only if you do not have funds to pay bills. Do not sign any document without reading. Make sure you do not deed your property to anyone. If ever you find that you are a victim of home equity fraud, you should contact the state mortgage banker’s agency for further action.