Seven Ways to Be Home Equity Savvy Lesson 4:

4. Know your interest rates and terms.

First, shop around for the best rates (check out Bankrate.com or LowerMyBills.com to compare lenders' rates). Then, see if your primary mortgage lender can offer you a deal. But make sure you understand how it works.

For instance, is the loan tied to the prime rate? Is it fixed or variable? Variable rates can hurt if rates keep going up. Determine when that variable rate adjusts and what your new payment amount will be when it does.

Read the fine print: Is there an origination fee (even if you don't use the loan)? Is there a property appraisal or application fee? Will you incur closing costs? Will your payment amount increase if you're ever late? And finally, are there fees if you pay the loan back early?

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