If you are in the home improvement mode and are thinking about taking out a home equity loan or a second mortgage, think carefully, because you could be putting your home at risk.

Some things to watch out for when considering a home equity loan are high finance charges coupled with costs for taking out the loan. Also, unscrupulous lenders may promise one set of terms when you apply and give you another set of terms to sign. And of course, you are not informed that what you were promised is not what you are getting.

The Federal Trade Commission has an excellent brochure titled, Need a Loan? Think Twice about Using Your Home as Collateral. It describes other things to watch out for such as a balloon payment, a large payment made at the end of the loan. If you can’t pay it you may lose your home.

Some loans have provision that the interest rate will increase if you miss a payment or pay late.

These are just a few of the traps to look for when taking out a loan on your home.