when applying for a home equity loan there can be some temptation to borrow more than you immediately need because you only get the payout once and don t know if you ll qualify for another loan in the future 
if you are contemplating a loan worth more than your home it might be time for a reality check were you unable to live within your means when you owed only 100 of the equity in your home if so then it likely will be unrealistic to expect to be better off when you increase your debt by 25 plus interest and fees this could become a slippery slope to bankruptcy and foreclosure sabrina jiang investopediahome equity loan requirementseach lender has its own requirements but to get approved for a home equity loan most borrowers will generally need though it is possible to get approved for a home equity loan without meeting these requirements expect to pay a much higher interest rate through a lender that specializes in high risk borrowers determine the current balance of your mortgage and any existing second mortgages helocs or home equity loans by finding a statement or logging on to your lender s website estimate your home s current value by comparing it with recent sales in your area or using an estimate from a site like zillow or redfin be aware that their value estimates are not always accurate so adjust your estimate as needed considering the current condition of your home then divide the current balance of all loans on your property by your current property value estimate to get your current equity percentage in your home rates assume a loan amount of 25 000 and a loan to value ratio of 80 heloc rates assume the interest rate during credit line initiation after which rates can change based on market conditions say you have an auto loan with a balance of 10 000 at an interest rate of 9 with two years remaining on the term consolidating that debt to a home equity loan at a rate of 4 with a term of five years would actually cost you more money if you took all five years to pay off the home equity loan also remember that your home is now collateral for the loan instead of your car defaulting could result in its loss and losing your home would be significantly more catastrophic than surrendering a car 