If you need money to pay bills or make home improvements, and think the answer is in refinancing, a second mortgage, or a home equity loan, consider your options carefully.

If you can't make the required payments, you could lose your home as well as the equity you've built up. That's why it's important not to let anyone talk you into using your home to borrow money you may not be able to afford to pay back. Not all loans or lenders are created equal. Some unscrupulous lenders target older or low-income homeowners and those with credit problems. These lenders may offer loans based on the equity in your home, not on your ability to repay the loan. High interest rates and credit costs can make it very expensive to borrow money, even if you use your home as collateral.

Talk to an attorney, financial advisor, or someone else you trust before you make any decisions about borrowing money. Non-profit credit and housing counseling services also can be useful in helping you manage your credit and make smart decisions about loans.

Early Warning Signs

Avoid any lender who:

- tells you to falsify information on the loan application. For example, stay away from a lender who tells you to say that your income is higher than it is.

- pressures you into applying for a loan or applying for more money than you need.

- pressures you into accepting monthly payments you can't make or could have trouble making.

- fails to provide required loan disclosures or tells you not to read them.

- misrepresents the kind of credit you're getting, like calling a one-time loan a line of credit.

- promises one set of terms when you apply, and gives you another set of terms to sign with no legitimate explanation for the change.

- tells you to sign blank forms — and says they'll fill in the blanks later.

- says you can't have copies of the documents that you've signed.

Be smart and shop around for a lender and be prepared to provide your entire financial history. This is due to the subprime mess that the United States is in and the scrutiny of the lending agencies.

You can still get a loan at a decent interest rate but you have to do your homework and find what is right for you.