You probably already know that a Home Equity Loan is a great way for home owners to get cash fast for things like college funds, debt payments and other expenses. But what if you dont have any equity in your home? Sounds odd, but its possible, especially if home values have recently dropped or you have a second mortgage on your property. Fortunately, its possible to still get approved for a Home Equity Loan. However, youll probably have to:

Pay higher interest rates and fees.

For the most part, expect to pay significantly higher interest on these types of Home Equity Loans. In many cases, the interest can be up to 6% higher than a typical Home Equity Loan, though its possible youll only have to pay 2% or so more. Moreover, youll pay higher closing costs and other fees when its time for payout. How much youll pay depends on your personal situation--the lender, your credit history, your income, etc. But overall, expect to have much higher costs.

Pay Private Mortgage Insurance (PMI).

PMI is required on most mortgages where the down payment is less than 20% of the homes value. If you get a Home Equity Loan without any equity in your house, youll have to pay PMI, too. The amount varies, depending on your lender, your homes value and other circumstances. However, it can easily tack on anywhere from $50 to $120 to your monthly payment. And you wont be able to drop PMI until you have 20% equity in your home.

Skip tax breaks.

In most states, Home Equity loan interest is tax deductible--any interest you pay during the year can be deducted on that years taxes. However, because of the nature of these types of Home Equity loans, chances are you wont be able to take this tax deduction on April 15.

Although Home Equity Loans are often a cheap, smart way to borrow money from yourself, they tend to be the best deal if you already have equity in your house. If you try to borrow before youve built up some equity, youll pay higher costs and get fewer perks.

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