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Inflation and higher interest rate Mortgages have been a burden for millions of Americans in recent years. Mortgages have driven up the prices of everyday goods and services, and higher interest rates to mitigate them have driven up borrowing costs. So there are few reliable alternatives to consider.
However, owners have a safe and efficient way to access the money through their home equity. Whether through a refinancing with withdrawal of funds, home equity loan Or Home Equity Line of Credit (HELOC)Homeowners have been able to rely on their current homes to weather today’s unique economic climate.
But as inflation slows and interest rate cuts become more likely, some homeowners may be wondering what’s the best way to tap into their equity right now. While any of the three options above can work, there are compelling arguments for opening a HELOC in August. Below, we detail three big benefits that come with pursuing this option right now.
Start by seeing online how much equity you can use today.
3 Big Bonuses for Opening a HELOC in August
Not sure if it’s the right time to open a HELOC? Here are three good reasons why August might be the right time:
A lower price than the alternatives
While HELOC Interest Rates Credit cards haven’t been immune to rising rates in recent years, but they remain significantly lower than many popular alternatives. With credit card interest rates averaging more than 20% Right now, with personal loan rates around 12%, the average HELOC rate of 9.17% is significantly cheaper.
Given that repayment periods HELOCs have an average term of 10 to 15 years, so it’s essential to get as low an interest rate as possible. Fortunately, HELOCs offer one of the best ways to do that in a high-rate environment.
Find out online today what HELOC rate you can qualify for.
The probability that the rate will fall further
HELOC rates are variablemeaning they are likely to change over time (usually once a month). While this may have been a major drawback in recent years when rates were soaring, it is a unique advantage today as interest rate cuts seem more likely.
And with the odds of a federal funds rate cut by the Federal Reserve at over 85% right now according to the CME FedWatch tool, if you open a HELOC in August, you could see a rate cut as early as September (and possibly later this year and into 2025). Compared to fixed rates on home equity loans (in which borrowers will have to pay for a refinance (to lock in a lower rate), which makes HELOCs particularly attractive in August.
Access to large sums of money
While rising interest rates have left many homeowners stuck in their current homes, worried about losing their low interest rates, it has also led to a surge in equity in their existing homes, reaching near-record levels. The average homeowner currently owns about $305,000 in equity People are home right now. But that may change as the economy evolves. If you know you want to access money this way, August could be the perfect time to act.
The essential
By opting for a HELOC in August, homeowners will be able to borrow money at a lower rate than a multitude of alternatives, and the rate they get in August could drop as early as September. Plus, unlike other borrowing options, homeowners will have access to hundreds of thousands of dollars right now. And, as an added incentive, they will be able to deduct interest paid on a HELOC of their taxes if they use it for IRS-approved home repairs and renovations. But these advantages are opportune and the house will serve as collateral in these borrowing circumstances, so it is essential to weigh the pros and cons. Advantages and disadvantages now before you act.
