A home improvement equity loan can be useful if you’re wanting to remodel, repair, or renovate your current house or other real estate, but it’s important that you understand exactly how they work. Of course, equity is the major factor in determining how much you’ll have to pay on a home improvement equity loan; your equity is the percentage of your house or property that’s already paid for, and is an indication of how much money you have invested in your house. If you own your house then you have 100% equity, but if you still owe money on it then you’ll have a lesser amount.Why does equity matter?When you take out a home improvement equity loan, the equity of your real estate serves as the collateral for the loan. If the value of your collateral is much higher than the amount that you plan to borrow than there’s a good chance that the lender will offer you a lower interest rate. The best home improvement equity loan you can get will come from having the most home equity; if you are still paying on your house, be sure to have more equity available than the loan amount that you’re asking for.To your lender, high equity shows the investment you’ve already made in your home, which in turn lowers the risk of you missing payments or declaring bankruptcy because you have personally invested so much into your home already. This lowered risk is one of the best ways to get the cheapest home improvement equity loan rates.What if I don’t have high equity?If you don’t own your home, then you might find that the equity you have built up in your home simply is not enough to cover all the expenses you’d hoped to be able to cover with your home improvement equity loan. If this happens, you might want to consider waiting to reapply for your loan when you have a higher equity, or to pay off some of your outstanding debts before you reapply.If you are in need of immediate repairs or if you have a decent credit score, then your lender may be more likely to give you the loan you need despite having a somewhat lower home equity value. Again, it’s a matter of finding the best loan for your needs.What loan options are available?If you are remodeling or doing major home improvements that require a larger loan amount, taking out a loan with long term fixed rate payments can make the money that you borrow easier to pay off over a longer period of time. If you only want to borrow relatively small amounts and pay off the loan quickly, then a home equity line of credit can provide more flexibility with the convenience of withdrawing money in variable amounts as needed. These credit lines have adjustable loan rates, with the potential of increasing over time.You can estimate monthly payments on different terms so as to determine which option is best for you by using a home improvement equity loan calculator, which can be found all over the internet by performing an internet search using your preferred search engine. With a little research and the right preparations, you can find the right loan for all your home improvement loan needs.