A home equity mortgage loan, also known as a HELOC, is often touted as a great way for homeowners to access quick cash in order to make  improvements on their homes, pay for credit card purchases, etc. Especially when it comes to doing home improvements with  home equity loan money, the idea is that such an investment will pay off when the time comes to sell a home. Likewise, you will improve your credit score by borrowing a considerable sum of money and then paying it off promptly.

However, is taking out a home equity loan really the best way to finance home improvements and build credit? To secure an equity mortgage loan, you will have to have paid enough money on your original mortgage loan to convince your lender that you can handle the responsibility of making additional monthly payments. Thus, if you have been paying your mortgage for only a few months, don’t even expect that an equity line of credit will be extended to you. Generally, the minimum amount of time required is 12 months of mortgage payments. This is in addition to you having a decent credit score and no financial issues, defaults, or late payments. If you fall into the category of the diligent mortgage payer with good credit, most lenders will be happy to talk to you.

There is also the cost of obtaining the loan itself. Obtaining a home equity line of credit typically does not cost as much as obtaining a mortgage. However, it is not free either. If you need only a few thousand dollars for some emergency work on your home, or for medical or dental bills, you may be better off simply putting the charges on your credit card.

Finally there is the matter of what the home equity line of credit will be used to finance. Many folks assume that home improvements will greatly raise their home’s value in the appraiser’s eyes. The truth is that most home improvements do little, if anything, to raise the home’s sale price. Kitchen and bathroom additions and improvements are often appraised at a third of what they cost to do. However, home improvements that increase the square footage of the house, or add key items such as a garage, do actually increase the value of the house.

While in some cases a home equity line of credit is essential, such as when you lose your job, are hospitalized and cannot make the medical payments, or have some other emergency, in most cases it is a frivolous and unnecessary luxury.The home equity loan is often touted as a "reward" for a homeowner’s due diligence in making mortgage payments on time. However, by taking on this burden, the homeowner has now acquired yet another loan. If the equity line is overdrawn, having a mortgage loan may not be enough to stop a complete loss or a hold on the house.

There are good reasons for obtaining a home equity loan, of course. For example, if you are sick and struggling to make medical payments, or if you have lost your job, then a home equity line of credit can be the answer to your prayers. Most home equity loans are given a low interest rate, making them easier to repay. However, such loans should not be treated frivolously. Always keep in mind that every loan you acquire slows down your ability to do other important things in life, such as invest, put money away for retirement, and pay off your mortgage.