Homeownership provides owners with a variety of benefits. Owners can build equity in their homes and grow their initial investment, often exponentially. Payments made on time can often boost owners’ credit scores and history, opening them up to better rates on other financial products in the future. And the interest they pay, particularly after initially taking out a mortgage loan, can be used as a tax deduction each year.
Homeownership can also serve as a backup cash alternative when money is tight or when significant expenses need to be paid. This is where a home equity line of credit (HELOC) comes into play. This form of credit allows you to access the existing equity in your home as cash versus taking out a new loan or another form of credit (the latter of which often has higher interest rates).
This revolving line of credit can be particularly helpful to have in an economy suffering from nagging inflation and persistent interest rate hikes. If you think you could benefit from going this route then start exploring your options here now or use the table below to check eligibility.
Why you should get a HELOC now
The reasons for taking out a HELOC vary based on the individual’s personal circumstances. There are, however, some timely reasons to get a HELOC now. Here are three to know:
Can help fight inflation
While inflation has cooled recently many Americans are still paying a lot more than they were in recent years, particularly when it comes to grocery shopping. More money spent at the supermarket reduces the amount of leftover income that can be used for other things like paying off debt, home repairs or education costs. A home equity line of credit can help ease the pain caused by inflation. And due to the lower interest rates available, it’s generally cheaper to pursue than, for example, a personal loan.
Not sure what you would qualify for – or what your interest rate would be? You can easily start exploring your HELOC options here now or plug in a few numbers into the table below to see how much you can get.
Home values are still high
“The national median single-family existing-home price increased 4.0% from one year ago to $378,700,” the National Association of Realtors noted earlier this month. “Approximately nine out of 10 metro markets registered home price gains in the fourth quarter of 2022 despite mortgage rates eclipsing 7%,” the Association noted.
What does this mean for homeowners considering a HELOC? It means that despite recent interest rate hikes their home may still be worth as much as it was before rates jumped – or the value of the home could have even increased. While this may make it harder for prospective homebuyers to secure their first home, it gives current owners a unique opportunity to get as much as they can out of their existing home. Scarcity in home inventory also will help keep values relatively stable.
If homeowners wait – and rates increase again – they risk the possibility that their home value will drop, leaving them with less borrowing power than they currently enjoy. But if they act now they could secure a substantial HELOC for a reasonable rate.
Interest may be tax-deductible
If you’re in the process of filing your 2022 taxes – or are eagerly awaiting a refund – your mind is already focused on taxes. Fortunately, a HELOC can help in this department, too. You may be able to deduct interest you paid on a HELOC if you use the funds to fix up your home or residence. “Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan,” the IRS explains. “The loan must be secured by the taxpayer’s main home or second home (qualified residence), and meet other requirements.”
If you get a HELOC now you won’t be able to enjoy the tax advantages on your 2022 return. But if you save the paperwork and include it in your return next year you may be able to deduct a significant amount of interest.
You can easily explore your local HELOC options here now or use the table below.
If you’re a homeowner in need of extra cash but are leery of the interest rates attached to credit cards or personal loans then consider turning to a home equity line of credit instead. HELOCs allow you to tap into your existing home equity and they usually come with competitive interest rates. This is a particularly beneficial alternative to pursue now when inflation is still persistent and home values are still relatively high. And the interest on a HELOC may be able to be deducted from your next tax return.
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