Homeownership equity surpasses previous records: Here's why it's advantageous to tap into that equity through borrowing.
In today's world, home equity loans and home equity lines of credit (HELOC) have been on the rise, and for good reason. With home prices soaring, homeowners are sitting on big piles of money in the form of equity. That's right, the cumulative home equity level in the United States has reached an all-time high, according to a recent report by Intercontinental Exchange (ICE). And guess what? That number is only expected to grow.
So, what's the deal with home equity loans and HELOCs? Well, these loans allow homeowners to borrow money using their homes as collateral, giving them access to a large, six-figure sum of cash. And, because your home is on the line, these types of loans often come with lower interest rates than unsecured loans like personal loans and credit cards.
But wait, it gets even better. The average HELOC interest rate is currently around 8.27%, while the median home equity loan rate is approximately 8.25%. These rates are materially lower than what you can get with a personal loan (around 13%) and a credit card (around 21%). In other words, if you need a large chunk of cash and want to save on interest, a home equity loan or HELOC may be the way to go.
And the cherry on top? If used for home repairs, renovations, or other qualified improvements, the interest paid on a home equity loan may be tax-deductible, making these loans even more appealing. Just make sure to consult a tax professional to understand the tax implications before making any decisions.
So, if you're considering taking out a home equity loan or HELOC, now might be the time to act. With interest rates low and equity levels at an all-time high, these loans can be a smart financial move for homeowners looking to borrow a significant sum of money at competitive rates. But, as always, be sure to do your homework, understand the risks, and consult a financial advisor before making a decision.
As a side note, if you're curious about how much home equity you're eligible to borrow, you can check your home equity loan and HELOC rate offers here. Happy borrowing!
- Aside from home repairs or renovations, home equity loans and HELOCs can be beneficial for personal finance management, providing a large sum of cash at lower interest rates compared to personal loans and credit cards.
- In the realm of lifestyle, homeowners may find it advantageous to consider home equity loans or HELOCs for substantial financial needs, given the current low-interest rate environment and rising equity levels.
- For those seeking financial advice on home equity loans, lifestyle, and personal finance, it's essential to consult a professional before making a decision, ensuring a comprehensive understanding of the tax implications and potential risks involved. Additionally, news about finance and home-and-garden may offer valuable insights for homeowners considering these types of loans.
