A second mortgage is a lump sum. A home equity line of credit is basically an open checkbook. Lump sum loans are best when you need all the money at once.. A line of credit is best when your cash needs are stretched out over time, like a series of home improvements or college tuition payments. Equity is the difference between your home's value and the balance on your mortgage loan. If your home is worth $500,000 and you owe $400,000 on the mortgage, then you have $100,000 of equity.

Home values across the country have begun to taper off. Some areas in California are reporting depreciation, and some areas in Florida, Virginia and Maryland are reporting slight appreciation. Most of the country is reporting flat home sales, and many people are concerned that home values may actually begin to decrease in value. Critics call this a housing bubble, and some anticipate the bubble will burst, as the interest rates continue to climb.

If you want to consolidate your debt--and you own your own home--you're in luck! If you're willing to use your house as collateral, you have a lot of low-cost options for debt consolidation. Here are three loans to consider:

One way to consolidate debts is to take out a home equity loan. There are instances when a person finds that he is an objectionable financial position. That is, he needs to make monthly payments that demands exceedingly high interest rates. This makes every month a financial strain on the budget.

Debt consolidation is a way of increasing your monthly cash flow by combining all your high interest payments into a low interest and easily manageable home equity loan. The process is explained in the example.