4 strategic home equity moves to make for July

If you're one of the homeowners with an average of $200,000-plus worth of home equity right now, then you may wonder if it's worth accessing and how you should do so. With inflation still elevated, albeit significantly cooled, and interest rates for traditional borrowing options high, many homeowners would benefit from using the equity they've already accumulated in their homes. And, there are multiple ways to do so, ranging from home equity loans to home equity lines of credit (HELOCs) to reverse mortgages and more.

To secure the most value from your home equity and keep costs minimal, however, you'll want to take a nuanced and strategic approach. Below, we gathered four strategic home equity moves to make heading into July. 

Start by seeing what home equity loan rate you could lock in here now.

4 strategic home equity moves to make for July

Have you already decided that home equity is your best credit option right now? Then you'll want to approach it smartly, especially in July's unique economic climate. Specifically, you should:

Consider a HELOC

While HELOCs come with slightly higher interest rates than home equity loans right now, they also come with the inherent ability to adjust over time thanks to a variable rate. This is a major advantage in an economy in which interest rate cuts appear imminent, possibly as soon as the end of 2024. If you go with a HELOC in July, then, you could soon see a rate cut. That's the opposite of home equity loans, which will come with a locked rate that you will need to refinance to get out of.

See what HELOC option works best for you online today.

Monitor certain dates

The next inflation report comes out on July 11, courtesy of the Bureau of Labor Statistics, and the Federal Reserve will meet again on July 31. If the report on July 11 shows additional cooling in the inflation rate, then interest rates may continue to fall in anticipation of a formal rate cut at the end of the month. And, obviously, a formal rate cut from the Fed will cause them to drop even further. But since home equity rates change daily, you'll want to closely monitor any movement on these dates for an opening to capitalize on a lower rate. 

Use it for summer repairs and renovations

Do you need extra funding to finance summer repairs and renovations this July? Then a home equity loan or HELOC is advantageous compared to credit cards and personal loans. Not only do both of the former options have lower interest rates, but if you use the funding you receive for IRS-approved home projects, you may be eligible to write off the interest you paid on the amount you borrowed when it comes time to file your 2024 tax return.

Only use what you need

It can be tempting to overspend with a home equity loan or HELOC, especially now when home equity levels are near record highs and rate cuts appear likely. But that would be a mistake. Like all borrowing options, you should only use what you need, not what you have access to. Rate cuts haven't taken place just yet and inflation is still above the Federal Reserve's target 2% goal. 

And remember that your home serves as collateral in these circumstances, so if you can't pay back all that you've borrowed you could lose your home in the process. So only use precisely what you need this July – and any other time you tap into your home equity.

See how much home equity you have to borrow here.

The bottom line

This July could be a smart time to tap into your home equity but you'll want to do so in a strategic and balanced way to minimize costs and maximize value. To do so, you should consider a HELOC and it's variable rate over a home equity loan, monitor important dates in the broader economic landscape for opportunities to secure a lower rate, use the funding for potentially tax-deductible reasons like eligible home repairs and only use exactly what you need. By taking these home equity steps this July, you'll significantly improve your chances of financial success both in the month you withdraw the funds and the months and years in which you use them in the future.