Why you should tap into your home equity before 2024
You've been building up equity in your home since the day you bought it - and prices have been growing at a rapid rate for some time now. If you bought your house before 2020, you likely have quite a decent amount of equity at your disposal.
That's great news considering the current economic climate.
Prices for goods and services are elevated. In an effort to combat inflation, the Federal Reserve has increased its target federal funds rate several times over the past couple of years. That means you've probably seen an increase in interest rates on the debt you have.
The simple fact is that if you have equity in your home, it may offer the monetary boost you need. But should you tap into it now or wait for the new year?
Access your home's equity now before the next possible rate hike.
Why you should tap into your home equity before 2024
If you're going to need your home equity in the near future, it's likely best to access it before 2024. Here's why:
Lock in rates before the next hike
The Federal Reserve recently paused interest rates, but the standstill isn't going to last forever. The Fed increases and decreases interest rates in response to economic activity. Third-quarter GDP growth came in at 4.9%, pointing to possible further inflation despite the Fed's higher rates.
That suggests rates could increase ahead. When you tap into your home's equity now, you can lock in today's interest rates before the next potential increase. Plus, when rates fall, you can always refinance to cut costs.
Lock in your rate now before it climbs.
Pay off credit card debt
The Fed's rate hikes have made credit card debt even harder to deal with. After all, credit cards come with variable interest rates. When the Fed increases its federal funds rate, lenders tend to follow up with their own rate hikes.
You may be able to borrow against your home's equity at a significantly lower interest rate than you pay on your credit card debt. This could give you an opportunity to consolidate your high-interest debt at a far lower rate.
Increase your earning potential
The old adage, "it costs money to make money," proves true time and time again. But what if you don't have the money you need to purchase equipment, further your education, or start that business you've dreamt of? How do you get the money you need to increase your income?
Your home equity could be the answer.
Even in today's high interest rate environment, borrowing against your home's equity is a low-cost alternative to many other loan types. You can use these low cost funds to give your earning potential a boost.
Renovate or repair your home
Does your home need repairs? Have you been considering renovations? These projects can get expensive quickly. The good news is that you may be able to use your home's equity to cover the cost of repairs and renovations - and doing so could result in a tax break. As long as you use your equity to work on your home, the interest you pay on the loan is tax deductible.
What's more, home renovations and repairs can increase your home's value, giving you access to even more equity.
Free up funds for the holidays
Today's financial climate is a tough one for many families. That's especially true with the holiday season in full swing. If you need extra cash to ease the financial burden of the holidays, you could use your home's equity to access the money you need without having to turn to high-interest credit card debt.
Tap into your home equity to free up holiday cash today.
The bottom line
There are several reasons to cash in on your home's equity. However, if you plan to do so any time soon, you may want to make your move before 2024. Data suggests that inflation still isn't in check, which could mean another rate hike is in the near future - resulting in higher borrowing costs.
