You may be considering a loan to take out some of your home equity as a means to supplement your income because of a possible job layoff, a business slowdown, or maybe you're anticipating an increase in your expenses that could push your monthly budget over the limit. 

To put off making a decision is a natural response, but waiting too long to access your home equity could result in a higher rate. The best time to get a home equity loan is before a bad situation can create a problem. Borrowing money can be easier when you don't really need it, and harder than when you do really need it.

When applying for a home equity loan or a refinance mortgage, if you can't show the lender a good source of income to make the payments, then you could be declined, or have to pay a higher home equity rate. If you are past the point of being able to show sufficient income, some lenders may offer a limited documentation program, however, that program normally requires a substantial amount of home equity, good credit, and will have a premium added to the mortgage rate.   

A reduction in your personal income, or an increase in expenses, could result in making late payments on current loans. Recent late payments within the last 12 months can make it more difficult to borrow against home equity, and cause the rate to increase. Credit reports will show payments as being late if they are over thirty days past the due date. Strict guidelines apply to your recent credit history, and late mortgage payments can be the kiss of death for a loan application.

The appraised value of your home is another issue that may affect your home equity rate if the combined loan to value is greater than 80%. A slow real estate market could lead to a decline in the appraised value, and as the loan to value increases, the rates can go up accordingly.