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The next Federal Reserve meeting is in just two weeks, and with it, a new decrease in the federal funds rate. This will be the second reduction in just two months and perhaps only part of an ongoing rate-cutting campaign. This is great news for borrowers, especially those considering tapping into their existing funds. home equity far from home equity loan Or Home Equity Line of Credit (HELOC). And with the average amount of equity in your home Currently hovering around $330,000, there is plenty of financing available for many homeowners.
Since the home serves as collateral in these circumstances, borrowers will need to take a strategic approach to using the equity in their home. You shouldn’t just tap into your home equity for any reason. As with all loan products, there are better and faster ways to use your home equity than others. Below, we’ll detail three smart ways to use it this November.
Find out how much equity in your home you could borrow here.
3 Smart Ways to Use Your Home Equity in November
Not sure if it’s worth taking out some of your home equity for November? This might be the case if you are using it for one or more of these reasons:
Pay off your high-interest credit card debt
THE average credit card interest rate is 23% right now. THE average home equity loan rate? Only 8.36%. So, with credit card rates almost three times those of home equity loans, it makes sense to pay off the former with the latter. It will save you hundreds, if not thousands, of dollars if you do it now. Considering that the average American currently owes about $8,000 When it comes to credit card debt, it pays to start now before the debt worsens further, putting your financial freedom even further out of reach.
Get started with a home equity loan now.
Carry out home repairs and renovations
Interest paid on home equity loans And HELOCs are tax deductible if used for eligible home repairs and renovations. But with only 10 weeks remaining in 2024, the window of opportunity to use this deduction this year is closing. So it pays to use your home equity for this reason now. If you wait much longer (keep in mind that depending on the lender, it can take weeks for funds to disburse), you risk losing your window of opportunity. At this point, you won’t be able to deduct interest paid until 2026. So don’t wait to act, assuming that’s what you intend to use the funds for.
Reinvest in a second home
Take home equity out buy a second one requires a delicate balance. But, if done correctly, it can provide an additional source of income through a rental property. And with mortgage interest rates also falling, this November could be a smart time to use your home equity to purchase a second home. Just be sure to calculate all of your potential costs – at current averages plus what they might be as rates fall – to more clearly determine the affordability of this unique approach.
The essentials
If you’re considering taking out your home equity now, make sure it’s for a good reason. What is eligible? Paying off high-interest credit card debt, making home repairs and renovations, and reinvesting to purchase a second home can all be valuable uses. Every homeowner’s goals and financial situation are different, however, so be careful in how you approach this borrowing option. Since your home serves as collateral in the exchange, you need to be sure that you are only taking out an amount that you can afford to repay.
