Paying off debt is certainly a downer, but consider your options before taking just any debt loan. Some debt management alternatives may be better than others for your particular situation. Using your home’s equity as a debt loan can be a solid decision, but first make sure it’s the right one for you.

Nominees for equity

Taking out a home equity debt loan isn’t for everyone. Borrowing from your home’s equity can be a good idea if you’re planning to borrow a small amount of cash and quickly pay off the loan. Banks tend to offer lower rates on short-term equity loans. Large equity loans over a long term often come with rates that are higher than fixed-rate mortgages.

A debt loan with your home’s equity may also be a good option if you have a very low rate on your current mortgage. It’s more logical to tap into home equity than to refinance your mortgage at a higher rate.

Beware of closing costs on a debt loan

Before borrowing on your home’s equity, make sure that your potential lender doesn’t charge closing costs. Most lenders will waive closing costs because they do not have to underwrite and perform other duties they would on a mortgage. These costs can tally up and leave you paying more on your debt loan than you should pay. Before agreeing on an equity loan, be certain that your lender isn’t going to make you pay the closing costs.

If you need help weighing the option of a home equity loan versus a home equity line of credit, use Bankrate’s home equity calculator.