home equity loan--good or bad

[panski master]

My wife said we should get a home equity loan to finsih our basement. Our home is four years old so we should have some equity built up. What is the process in getting a loan for $7000-$10,000? Does this loan get added to your original mortgage or do you have a separate payment. I plan on doing most of the work myself except for the electrical/plumbing so I will be able to save on some of the labor costs. Any input would be very helpful. Thanks. KK

[IFallsRon]

Check with your current mortgage company. We probably get a monthly offer for a home equity loan.

[LwnmwnMan2]

We just took one out for $100k last December, Home Equity Loan.

The bank (local) just wanted to be listed as the second mortgagee. We're paying it off in 4 years, so that may have been the difference.

I'd have to say that your local bank should have no problem loaning you up to your $10k if you've already been in the home for 4 years.

And yes, I did say $100k in 4 years..... hope there's no major bills for the next 3.5...

[pfluemis]

Taking a second mortgage/home equity loan out for home improvement is a pretty good idea. Shop around and see who has the best rates and lowest fees. NEVER...EVER...take a second mortgage out to buy something, or use any extra balance in the second mortgage to buy something. Yes, unless you refinance, which is different than a second mortgage/home equity loan, you will have a second payment.