3 reasons to tap into your home equity ahead of summer
Summer is closing in fast and that's exciting news for many. With summer vacations likely around the corner and more time to spend with school-age children, there can be quite a bit to look forward to this time of year.
But what if you have a pressing financial need this summer?
Maybe you need to complete home repairs before summer showers set in. Or, maybe you need to get rid of high interest debt to free up money in your budget for summertime spending. There's a seemingly endless list of other expenses you may need to cover this summer.
No matter what your financial need is, your home equity may offer the funding you're looking for at a competitive interest rate. And, tapping into your home equity ahead of summer could be a wise decision.
Find out how affordable it can be to tap into your equity now.
3 reasons to tap into your home equity ahead of summer
Here are three smart reasons to tap into your home equity before the start of summer:
Financial needs are high
Inflation cooled in April, meaning that the prices of goods and services didn't grow quite as fast in the month as they did in March. But, April's 3.4% inflation rate is still too high for comfort. As the cost of goods and services continues to head up, your need for funding may only grow.
Tapping into your home equity is one way to get your hands on the funding you need to absorb today's higher cost of living. And, since home equity loans and lines of credit typically come with lower interest rates than other borrowing options, payments on these financial products may be more affordable than payments on credit cards or personal loans.
Use your home equity to ease the burden of today's inflationary environment today.
Summer is a smart time to complete home repairs and renovations
If your home needs repairs, or you're considering making renovations to it, summer is a smart time to get started. After all, summer comes with longer daylight hours, giving you (or those you hire) more time in the day to get repairs and renovations done.
And, if you use your home equity to cover the cost of repairs or renovations, you could enjoy tax benefits. As long as you use the money you borrow to improve the home you used as collateral for the loan or line of credit, you may be able to write the interest you pay off when you file your taxes.
Rates could tick up following the June Fed meeting
Inflation cooled in April, but not by much. Keep in mind that March's inflation rate was 3.5% - just one-tenth of a point higher than April's 3.4% inflation rate. And, the Federal Reserve's inflation goal is 2%, which is significantly lower than either of the readings above.
If inflation continues to come in significantly above the Fed's 2% target, the central bank could decide to take action. And, if the Fed does take action to combat inflation, it could increase interest rates further - only increasing the cost of borrowing.
"If you can tap into the home's equity prior to a Fed interest rate hike, it is always advised," explains Colby Van Sickler, founder and CEO of the wealth management firm, F3 Wealth Management. "Once the Fed bumps interest rates, home equity loans will follow immediately."
The Fed will meet to discuss monetary policy on June 11 and June 12, 2024. Tapping into your home equity now, before any potential rate hike, could save you money in the long run.
Don't wait for rates to increase. Lock in your home equity loan interest rate now.
The bottom line
With summer just around the corner, now may be an advantageous time to tap into your home equity. As inflation concerns continue, the potential for a future rate hike only grows. Moreover, summer is a great time to take care of home repairs and renovations. And, if you use your home equity to do so, you could enjoy tax benefits. Learn more about your home equity borrowing options now.
