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Home equity is essentially the amount of your house that is paid off. In other words, your home equity is the value of the house (not the value of the last sale, but the actual appraisal value) less the amount that is currently mortgaged. Your home equity can be used to help get you loans and line of credit, or you can simply let it accrue.

Your home equity can be a wonderful tool to help you accomplish things like remodels, pay for your education or that of your kids, or even take a vacation and forget about the world for a while. The home equity line of credit is not specific in possible uses. In fact, you can use it for anything you want to, just like a regular credit card.

Is the equity in your home sitting there untapped while you take out high interest loans to finance your education? With interest rates on home equity loans dropping, this is a good time to reassess your financial strategy for education. While traditional wisdom from the financial experts suggest that borrowing against the equity in your home should be a last resort, that advice hasn’t kept up with the times. The fact is that today’s low interest rates make home equity loans an affordable alternative for those who can’t qualify for government subsidized student loans.

When should you consider a home equity loan for educational purposes? In general, the interest rates on home equity loans are higher than those on federally subsidized loans like the Stafford and PLUS loans, but not everyone can qualify for those. When compared to most private education loans, home equity loans are considerably lower. Before deciding that you should use a private education loan just because it’s labeled as being for your education, do a point by point comparison – then choose the cheaper loan. Don’t forget to include any fees into your cost calculations when comparing the cost of education loans versus a home equity loan.

When you refinance your home mortgage, you need to shop for more than interest rates. Points, origination costs, lock-in fees, documentation, attorney fees and notary public costs are just a few of the additional charges that can change the overall cost of refinancing. It’s important to understand refinancing fees and costs before you sign on the dotted line.

First and foremost, you need to understand the APR, or annual percentage rate. This is the single largest cost associated with a home mortgage loan. The APR includes the interest rate, points, loan service fees and brokerage fees that are charged each year you are in the loan.