Imagine sitting on your front porch one rainy evening, and feeling a drop. Then another drop. Your roof is leaking, and needs to be replaced. The problem is, every dollar of your pay check is already budgeted to cover your monthly expenses. In this case, a home equity mortgage can help keep the roof over your head.

For homeowners in need of a little extra cash, home equity mortgages are a real bonus. To fully grasp the concept of a home equity mortgage, you need to know about equity and understand how a mortgage works.

If you have a mortgage, it's like any other type of loan. You borrow money from a lender, usually a bank or credit union, and agree to pay it back with interest. You will agree to pay the loan back through a series of monthly, semi-monthly, bi-weekly or weekly payments. Mortgages are amortized over a fixed period of time, typically twenty-five or thirty years. If you keep your current payment schedule and make your payments over the amortized period, you will repay the entire loan and will be debt-free.

As you continue to make your monthly payments, your home equity begins to increase. With every payment you make, you own a little more of your home and over time, the property becomes a major asset to you. The more home equity you have at any given point of time, the more financial power you possess.

Home equity mortgages are amounts of money borrowed against the value of your own property. In essence, you are borrowing money against the value of the property that you already own. Homeowners have different reasons for taking out home equity mortgages, but it always boils down to cash generation.

Debt consolidation is one common reason for homeowners to take out a home equity mortgage. The rates paid on a mortgage are significantly lower than other types of credit. For example, your mortgage interest rate can be five percent, while the credit card company is gouging you at a whopping eighteen percent.

For this reason, it only makes sense to pay off all of your other debts and incorporate or 'consolidate' them into one easy payment at a lower rate. The reduction of stress alone is worth the effort, as you can breeze through the month without facing a stack of overdue credit bills. Be careful though; home equity mortgages only work if you have sufficient home equity to provide enough cash after covering the costs associated with the additional mortgage.

Other reason for taking out a home equity mortgage can include children's education funds, home improvements or virtually any other need you might have for cash. Some homeowners also turn to home equity mortgages as a means to take advantage of lower interest rates. If prevailing market rates are lower, it's wise to refinance the loan and lock in at a lower rate. This can also generate extra cash.

Home equity mortgages can also provide investment opportunities. You can borrow against your home, and then invest the funds into a plan that offers a higher rate of return.

Whether you need cash today, would like to consolidate your debts, or want to have a little extra tucked away for the future, home equity mortgages can offer the help you're looking for.