Beautify Your Backyard with Your Home's Equity from Informa Research Services.

CALABASAS, Calif. -- It's almost the fourth of July. The hot dogs will be sizzling and the watermelon will be juicy. But will your backyard be in shape so that your family and friends can enjoy them? If you've been thinking about starting a remodeling project - be it landscaping, installing a deck, or fixing up the pool - but have hesitated because of the financial aspect, you should consider tapping into your home's equity (http://articles.moneycentral.msn.com/Banking/Loan/HomeEquity.aspx).

There are two ways you can do this: with a home equity loan or a home equity line of credit. With a home equity loan, you will receive a one-time payout with the stability of a fixed interest rate and monthly payment. With a home equity line of credit, on the other hand, there is a variable interest rate (sometimes with an option of a fixed rate as well), and you will have the flexibility to use your line of credit at anytime, which is ideal if you have ongoing financing needs. The interest accrued on both of these loans is usually tax-deductible. Your situation and the type of your project will determine which of these loans is better for you.

Getting Started

Here are the steps you need to take toward using your home's equity to beautify your backyard:

* Decide which loan is sizzling for you. As mentioned above, there are several differences between home equity loans and home equity lines of credit. If you are ready to pay for your project now, and you therefore want one lump sum and a fixed interest rate, then a home equity loan is right for you. But if you need to make payments to a contractor, and would rather have ongoing access to your funds and a variable interest rate, then you should look into home equity lines of credit. Consider your situation before committing to one loan or the other.

* Bite off only what you can chew. There are also options having to do with repayment plans, such as principal and interest or interest-only. Make sure you know all your repayment options so you know you are getting the best plan for your situation and lifestyle.

* Use all the fixins. You can visit your local branch and fill out an application, or you can do it over the Internet. Most banks today have online applications which you can fill out from the convenience of your own home, and they promise to give you a quick response, sometimes in seconds! This certainly relieves some of the hassle of visiting the bank, and it definitely saves time. After you apply, they will tell you if you qualify, and if so, how much credit is available to you and what kind of interest rates you can get.

* Know what's on the menu. Use the Internet or make phone calls, but be sure to shop around for the best interest rates. Do not settle on a loan from one bank before you know what other banks can give you.

A home equity loan or home equity line of credit is a great way to finance a home renovation project because although you are borrowing against your home, you are putting the money right back into your home, thus increasing its value, which will serve you well in the future. So after you fix-up your backyard using your home's equity, and after you have been showered with compliments from family and friends, all you need to do is throw some hamburgers on the barbecue, pour yourself a nice cold glass of lemonade, sit back, and enjoy the fireworks. You'll be glad you did! Happy 4th of July!

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