Looking to tap into your home’s equity? There are several options, and a few things to consider, when deciding which right for you.

If the interest rate on your mortgage is higher than current rates, it may make sense to refinance and take a lump sum of cash from your home’s equity. You’ll simply refinance your mortgage to a larger loan amount and take the difference in cash.

Another option is a home equity loan. A home equity loan is essentially a second loan that you take out in addition to your first mortgage. Commonly referred to as a second mortgage, a home equity loan allows you to tap into your home equity to get cash without refinancing your first mortgage. A home equity loan is a good choice if you’d like your cash in a lump sum and you already have a great rate on your first mortgage.

A home equity line of credit (HELOC), your third option, is very similar to a credit card except that it uses the equity in your home as the revolving line of credit. You make monthly payments only if and when you use the money. But, unlike credit cards, the interest is usually tax deductible.* With a HELOC, you can get a lump sum at closing, or elect to take only part of your money and draw on the rest when you need it. Unlike a home equity loan or a refinance, you can get a home equity line of credit in as little as ten days. A HELOC is a good choice if you’d like ready access to your home equity when you might need it.

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Simply put, a mortgage is a home loan you take out to finance the purchase of your home. It’s also a legal contract stating that you promise to pay back the loan on a monthly basis. Your monthly payment typically goes toward interest, taxes and insurance as well as the loans principal.

There are literally hundreds of variations of mortgages. Fortunately, there are just a few basics you need to know in order to understand most of them.

Fixed-rate mortgages have a fixed interest rate over the term of the loan. By far, most mortgages are fixed-rate mortgages. The main advantage of a fixed-rate mortgage is that your monthly payment never changes. The disadvantage is that if interest rates fall below your fixed-rate, and you want to lower your rate and consequently your mortgage payment, you’ll have to refinance.

Adjustable-rate mortgages (ARMs) start with a lower interest rate than a fixed-rate mortgage for an introductory period—typically 1, 3, or 5 years. After that, the rate adjusts, usually annually, based on a pre-determined index. An ARM is a good choice if you’re expecting to live in your home for less than five years and can also help you qualify for a larger loan.

The term of your mortgage is the number of years you have to pay back the home loan. Most people opt for 30-year terms, but 10-, 15-, 20-, and 40-year terms are also available.

The down payment is the difference between how much you borrow and the purchase price of your home. And, in spite of what most people think, you don’t need a big down payment to buy a home. There are many low and even zero down payment loans.

Get approved for your home loan before you shop

Why apply for a mortgage when you haven’t even started looking for a house yet?

You’ll be in a better position to negotiate because the seller knows that you’re already approved for your mortgage and that your offer is good. Having an approval gives you these advantages as a buyer:

• You know exactly how much home you can afford, eliminating the guesswork.
• You’re in a better position to negotiate a lower purchase price because the seller knows your offer is good.
• Once the appraisal and title work’s been done, you can close on a home in days, not weeks, potentially saving the seller a lot of money—another bargaining chip.
• You’re a virtual cash buyer—it’s like shopping for a home with the money in your pocket.

Home loans are most successful when you follow the basics.

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