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3 reasons to use home equity before June

By applying for a home equity loan now, borrowers could avoid having to potentially pay a higher rate in June.  Getty Images

For much of the last two years, Americans have been combating both elevated inflation and higher interest rates designed to rein it in. Though inflation just dropped in April and is down significantly from 2022, interest rates are still stuck at their highest levels in decades. That's made borrowing more expensive, right at the same time that the costs of everyday items have been prohibitive. 

There has been one borrowing option, however, that's still cost-effective: home equity. Homeowners can access large sums of money by tapping into their accumulated equity via home equity loans and home equity lines of credit (HELOCs). But in an evolving economy in which both interest rates and inflation are still a major consideration, the benefit of using this type of credit is largely tied to when it's being used. And there are some compelling reasons homeowners may want to tap into their home equity before June.

Start by seeing what home equity loan rate you could qualify for here today.

3 reasons to use home equity before June

Here are three reasons why homeowners should consider accessing their home equity before June.

Rates could rise

The Federal Reserve is set to meet again on June 11 and June 12, and despite some optimism earlier in the year that the June 2024 meeting would involve a rate cut announcement, the opposite may be more likely. Thanks to inflation running hot in January, February and March - and just a 0.1% drop in April - the Fed may feel like more work needs to be done to get inflation to their target 2% goal. And that work may entail yet another rate hike. While many economists do expect the Fed to keep rates the same in June, even the prospect of a hike to come could raise the rates lenders offer on their products, including home equity loans and HELOCs. So don't wait for that possibility to become a reality.

Get started with a home equity loan online now.

You may qualify for a tax deduction

Do you need money to fund a summer home project or renovation? Then home equity loans and HELOCs are the preferred route. Not only do both options come with significantly lower interest rates than credit cards and personal loans, but you'll also be eligible to deduct the interest paid on either if you use it for IRS-approved home projects. But with Memorial Day just days away and the unofficial start to the summer approaching, it behooves homeowners to act promptly if they want to finance - and complete - these projects in time for the warmer summer months.

Your debt is growing

If you have credit card debt or other unsecured types, you may be stuck paying exorbitant interest rates on what you owe. And the prospect of those rates increasing in June is elevated, as noted above. But if you apply for a home equity loan or HELOC you can use those funds to consolidate or pay off your other debts right now, frequently at a much lower interest rate. But because it takes some time to get both approved for a home equity loan - and then have the money disbursed to you (think a few weeks) - it makes sense to apply right away so you'll have the money readily available before that debt becomes even more expensive.

Explore your home equity loan options online today.

The bottom line

Home equity loans and HELOCs are two cost-effective borrowing options in today's elevated rate climate. To get the most value out of either, however, homeowners should consider acting quickly, ideally before June. With the prospect of a rate hike higher than many had anticipated, the need for funds to complete home repairs (and the added incentive of a tax deduction) and the potential for already-high rates on unsecured debts to go even further, it's beneficial for borrowers considering their equity to act now. 

Just be sure to weigh all of the pros and cons before applying as your home will serve as collateral in these circumstances and you could lose it in the process if you're unable to pay back what you've borrowed. 

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