You can qualify for a home equity loan even if you have bad credit, but it's likely that you'll have to pay extra for the privilege. This includes higher fees as well as higher interest rates, and you may even end up with an adjustable rate loan.

As with mortgages, the interest on a home equity loan may be tax deductible at the federal and/or state level. Even better, some home equity loan payments themselves are tax deductible. Check with your provider or an accountant to be sure this applies to you.

You're more likely to get a home equity loan if you've paid more than five years of payments on your first mortgage. Although it's possible to get a loan without building up a large equity, it's more difficult, often requires special circumstances, and will generally cost more.