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If you're approved for a home equity loan then you can use it for whatever you want including paying off your mortgage. Usually a home equity loan is a lower interest rate especially in this 2011 economy with the lowest rates ever.

It can be very costly to pay the closing fees in order to refinance your mortgage to a lower interest rate so a home equity loan may be the route to take for you. If you've already paid down a lot of your mortgage and have a lot of home equity available you should take a look at the current interest rates with your mortgage lender.

The only thing you might have to pay for is an appraisal to be sure of your homes worth. Then you can get up to 80% minus the amount you owe. If you owe $50,000 and you're paying 6% interest right now you can probably get a home equity loan very easily for much less of an interest rate. Mortgage rates are at about 4.5% currently and home equity rates are about 3.50%.

Use a mortgage calculator to see what the monthly mortgage payment would be on your new home equity loan and compare it to your current mortgage payment.

$50,000 over 10 years at 6% interest

Total Interest Paid - $16,600

$50,000 over 10 years at 3.50% interest

Total Interest Paid - $9,000

You can also use the low interest rate that you get to pay off your credit card or personal loans you might have. Any time you can lower an interest rate then you should because you're paying more money than you have to for no reason at all.

1 year ARM 5% - 30 Year Mortgage 

That means that you get the mortgage today and your interest rate will be 5% for 1 year.  Then after the first year your interest rate will adjust once and be fixed again for the next year.  This continues for the length of the mortgage.

3/1 Fixed / Adjustable - 30 Year Mortgage

That means if your interest rate starts at 5% it will stay fixed for the first 3 years.  It will adjust once and stay fixed for another year, then adjust and so on for the 30 year mortgage.

5/1 Fixed / Adjustable - 30 Year Mortgage 

That means if your interest rate starts at 5% it will stay fixed for the first 5 years.  It will adjust once and stay fixed for another year, then adjust and so on for the 30 year mortgage. 

30 Year Fixed Rate Mortgage 

In this case the fixed interest rate starts a bit higher like 5.50% but it stays the same for all 30 years even if the interest rate goes up to 15%.

5/1 30 Year ARM Interest Only Loan 

This is a VERY risky loan.  I only recommend it for someone who is either flipping a house or they are only staying a year.  You don't pay any principal for 5 years, however all of the principal is divided over 25 years instead of 30.  I would prepare to have about $200.00 or more added to you principal payment.  Also, it's an adjustable rate mortgage so if the interest rate went up over the last 5 years yours will too.  Even 1% increase on a $150,000 is $95.00. So over all your mortgage payment jumps $295.00 and for the life of the loan.