3 home equity loan questions to ask this April

In today's unpredictable and elevated interest rate climate, many borrowers may find themselves searching for a cost-effective and reliable borrowing tool. Fortunately, if you're a homeowner, you likely have one at your disposal already. By borrowing from your home equity with a home equity loan or home equity line of credit (HELOC), you can likely secure a large, six-figure sum of financing with a rate materially lower than what's available with alternatives like personal loans and credit cards. Plus, with the average home equity amount sitting around $313,000 now, there's likely plenty of equity to borrow now while leaving a healthy portion for potential use in the future.

Still, borrowing from your home equity, particularly with a home equity loan, isn't risk-free. In the economic climate of April 2025, with inflation cooled but sticky, higher interest rates on pause, and stock market volatility high, homeowners should take a particularly strategic approach before securing a home equity loan. That starts with having the answers to the three questions below.

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3 home equity loan questions to ask this April

Considering applying for a home equity loan this April? Here are three important questions to consider the answers to now:

Should I wait for rates to drop?

Waiting for home equity loan interest rates to decline may be tempting, especially after they fell for much of 2024. But that's always a gamble as predicting the future of interest rates with precision is impossible to do. Additionally, home equity loan interest rates actually rose recently to an average of 8.40%, with slightly higher rates for 10 and 15-year repayment periods. 

So, waiting for a drop may not make sense right now, particularly as the market volatility plays out long term. In this climate, if you can secure an affordable home equity loan rate, it's likely worth locking it in now. You could always refinance to a lower rate in the future, should they materialize, and in the interim, you'll get access to the financing you currently need now.

See what home equity loan rate you'd qualify for online today.

Can I delay my financing needs?

Borrowing from your home equity requires you to put your home up as collateral. Failure to make your repayments could result in your home being taken back by the lender. So it's critical that you can comfortably afford repayments — and that you use the funds for the appropriate purposes. 

In today's uncertain economy, then, you should ask yourself if the funds are truly needed right now or if you can sacrifice a bit by delaying your financing needs. For some items, like consolidating high-rate credit card debt via a home equity loan, it may still be advantageous to proceed, even in today's economic climate. But for other projects that are less urgent, like some home renovations or landscaping needs, waiting for more market certainty may make sense.

Should I pursue a HELOC instead?

If you're looking for one of the lowest interest rates available now, across the borrowing spectrum, not just the home equity space, a HELOC could make sense. Down more than two full percentage points just since September 2024, a HELOC is significantly more affordable than home equity loans, credit cards and personal loans. And thanks to a variable rate that changes monthly for borrowers, it could continue to decline in the weeks and months to come, giving homeowners an even more affordable payment without having to deal with the stresses and expenses of refinancing. Just remember that a variable rate can increase as quickly as it can decline, so the inherent volatility should be priced into your repayment calculations before proceeding with a lender.

The bottom line

A home equity loan can be a smart and effective instrument for borrowing money, even in today's unique economic landscape. To ensure that it's both, however, homeowners should consider the above three questions and have realistic answers for them before proceeding. By doing this now, homeowners can better position themselves for home equity loan borrowing success, both in the current economy and over the long term.

Learn more about your home equity loan options online today.