Deal? Or No Deal?

7. No-cost, Low-rate HELOC

You've been thinking of opening a home-equity line of credit when you see the following offer in the window of your bank: no-cost heloc! 2.99 percent. Deal?

NO DEAL! First of all, banks don't usually charge to establish a line of credit, says Keith Gumbinger, a principal at mortgage-data provider HSH Associates. So don't let the no-cost offer sway you.

And that teaser rate? It'll expire, usually within six months; then your HELOC may balloon to the prime rate plus one or two percentage points, while a bank across town is offering prime minus one.

For the real bargains, look to the smallest lenders in your market. Because they don't have the money for big ad campaigns, says Gumbinger, "the little guys compete on pricing."

And don't try to hop from teaser rate to teaser rate. The lender will likely hit you with an early-termination fee if you close the line of credit within the first three years.

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