A home equity loan also known as a second mortgage is a loan in which you pledge your home as collateral. When you obtain a home equity loan the lender will have a lien on your house.  This lien will have to be paid off before you can sell the home in order to deliver a free and clear title to the buyers.

Home equity loans can be a great financial management resource tool when used responsibly. They can be used for debt consolidation, home improvement and more. But it is important for you to be aware that if you default on the loan you could lose your home. For this reason, make sure your that if you get a second mortgage your income is sufficient to cover the monthly payments.

You need to also be aware that there are some home equity loan scams being perpetrated nationwide against unsuspecting homeowners. These scams usually involve unscrupulous lenders who prey upon homeowners, particularly the elderly and low income, who are desperate for cash. What happens is the homeowners in their desperate plight ends up with a bad credit home equity loan or home improvement loan in which the terms are so outrageous that the loan eventually goes into default and the borrower loses his home.

To avoid being scammed, when shopping for a home equity loan you should only choose trusted and established mortgage companies and lenders. This is especially true when shopping for a home equity loan online as there are thousands of second mortgage loan lenders competing for your business. Some are legitimate lenders and some are shady characters just out to make a quick buck by obtaining your personal information and then selling it to the highest bidder. Do your homework!