Why you should open a HELOC this fall
If you're a homeowner looking for some extra financing right now, you have an easy way to get it – your home equity. Whether you pursue a cash-out refinance, a reverse mortgage, a home equity loan or home equity line of credit (HELOC), your home could serve as the cost-effective way to access money now. And considering that the average homeowner currently has hundreds of thousands of dollars worth of equity to access now, there's likely plenty of money available, regardless of what you need it for.
Like all credit options, however, the timing needs to be right to be valuable. Fortunately, this fall is a great time to tap into your home equity, particularly if you pursue a HELOC. Below, we'll break down four reasons why you should strongly consider opening one this fall.
Start by seeing how much money you can access with a HELOC now.
Why you should open a HELOC this fall
Not sure if a HELOC is the preferred option for your financial situation now? Here's why it may be smart to pursue this fall:
Lower interest rates than the alternatives
The average HELOC interest rate is just 9.32% right now. That's multiple points lower than the average personal loan rate (which hovers around 12% currently) and credit cards (which are above 23% now). Because your home serves as collateral in these circumstances, lenders tend to offer lower rates than they would with popular alternatives. So save on interest and open a HELOC instead.
Get started with a low interest rate HELOC here now.
The potential for rates to fall further
HELOC interest rates are variable and subject to change as the rate climate does. This is a major advantage right now as interest rate cuts loom for the fall and in the months after. If they do, the rate you pay on a HELOC will automatically adjust downward (they typically change monthly). While this could be a risk in a different market, it's worth taking now in the face of multiple, potential interest rate cuts to come.
Additional savings not available with a home equity loan
Not only can you save more with a HELOC versus a home equity loan now thanks to the latter's variable rate nature, but you can also save some upfront costs. That's because home equity loans will need to be refinanced to secure a new, lower available rate. And that refinancing will be costly (often 1% to 5% of the full loan value). But you'll keep those additional savings with a HELOC because the rate will simply drop on its own, without the need for formal refinancing.
Tax benefits in 2025
Interest paid on HELOC is tax-deductible if utilized for IRS-eligible home repairs and renovations. So this fall will be the final season in which you can use the HELOC for these reasons if you want to get the write-off when you file your tax return in 2025. Any HELOC used for these purposes after December 2024 will have to wait until 2026 to be eligible for interest tax deductions. If you know you need the funds, then, and want to secure the tax benefit in 2025, then consider opening a HELOC this fall.
Learn more about your HELOC options online today.
The bottom line
If you're looking for extra financing but don't want to pay a high interest rate to get it, consider a HELOC this fall. This unique option comes with significantly lower rates than popular alternatives and it has the inherent ability to fall further as the interest rate environment continues to cool. This feature will also allow users to enjoy additional savings because they won't have to pay for the refinancing closing costs they otherwise would have been burdened with by using a home equity loan. And, finally, if homeowners act this fall – and use the HELOC for eligible home repairs – they may be able to get a tax deduction when they file their return in 2025. Just be careful when using your home equity as a funding source as you could potentially lose the home in question if you can't repay all that you've borrowed.
