Home Equity Line of Credit: Harder to Get, but Worth the Effort SPONSORSHIP

The wrong way to use your home equity line of credit: purchasing $1,300 worth of ties, as the current court case of former Illinois governor Rod Blagojevich and his wife, Patti, recently revealed. According to court documents, the governor and his wife were using credit cards and home equity to finance a lifestyle they could not afford.

The Blagojeviches weren't the only ones who tapped valuable home equity in the past decade, only to get caught up in a spending cycle that has made it hard to pay down the debt.

It is those folks -- people who took out home equity lines of credit, or HELOCs, to pay for vacations, boats, automobiles and other big-ticket items -- that may be finding themselves underwater now on their mortgages as their homes have dropped in value.

But unforeseen expenses do come about. And if you've been putting off repairing the roof, or your daughter's wedding is going over budget, using your home equity is one of the cheapest ways to borrow money. And rates are at historically low levels.

These days, home equity loans and home equity lines of credit are harder to qualify for than they were a couple years back, but there are few better lending deals out there right now.