Why home equity is still worth using today
It's always smart to be careful with your money. However, in 2023, with steady unemployment but stubborn inflation and decades-high interest rates, it's critical to make the right decisions. With little room for error, each financial investment and decision takes on new importance. For homeowners, many of whom have been priced out of expensive refinancing alternatives, there are few attractive options worth pursuing.
Home equity loans and home equity lines of credit (HELOCs), however, are two that could still be worth using right now. By tapping into the equity they've accumulated in their homes, owners can finance major repairs or renovations or simply pay for significant expenses like weddings, homes or college. But, like all financial products, there are some items borrowers should be aware of to truly determine if home equity is worth using now.
Start by exploring your home equity borrowing options here to see what you're eligible for.
Why home equity is still worth using today
There's a compelling case to be made for homeowners to use their home equity, even in the economic environment of October 2023. Here are three reasons why it could still be worth using right now:
The alternatives are more expensive
Arguably the best reason to use home equity now is because it's cheaper than the alternatives. While rates on home equity loans and HELOCs for qualified borrowers are still in the single digits, rates on personal loans are upward of 10% and credit cards are currently charging borrowers upward of 20%. Compared to these popular alternatives, home equity loans and HELOCs are still cost-effective.
See what home equity loan rate you could qualify for here.
There's more to use now
The average homeowner currently has around $200,000 worth of home equity that they can access now, according to a September report. That's thanks to a dramatic increase in home values across the country. While this amount of equity is relative to the home in question — and the location of that home — chances are high that you have a lot to utilize now. So consider tapping into it today before rates stabilize and home values potentially level off.
It may not stay beneficial long-term
As anyone who has paid attention to the rate environment in recent years can attest, it's subject to change without much notice. So, while home equity loans and HELOCs can be beneficial to use now, it may not stay that way long-term, particularly if the Federal Reserve raises rates again before the year is out. That's why, for many homeowners, it makes sense to use a home equity loan now, before the next Fed meeting.
Get started by exploring your borrowing options here today.
The bottom line
Home equity borrowing is still worth it for many homeowners, primarily due to the competitive interest rates offered and the high average amount owners have to potentially borrow from. But it may not be as advantageous in the weeks and months to come, particularly as the Fed eyes yet another increase to the benchmark interest rate. So be judicious — and time an application carefully. Remember, when using home equity, your home will serve as the collateral, so you should carefully weigh the pros and cons. Review your home equity borrowing options now to learn more.
