Should you borrow home equity before 2026? Experts weigh in

As 2025 comes to a close, homeowners are holding a substantial amount of equity. The latest ICE Mortgage Monitor report shows that homeowners with mortgages collectively hold $17.3 trillion in equity right now.

Home equity borrowing rates, meanwhile, are declining and are now averaging under 8%. Many homeowners are weighing whether to pull cash from their equity now through a home equity loan, home equity line of credit (HELOC) or a cash-out refinance, or wait for potentially lower rates in 2026. Rates could move lower if the Fed's recent rate-cutting trend continues.

But waiting comes with its own considerations as well. Namely, will homeowners have this much equity available to them in the future? While home appreciation varies by location, if prices fall, home values could drop and shrink the amount of home equity homeowners currently have. At the same time, rushing to borrow equity before prices drop could result in the owner being underwater on their loan, owing more than what the home is now worth.

So, should you tap into your home's equity before 2026? It's a serious decision that requires careful thought. We consulted with a few experts to shed light on whether it makes more sense to act now or wait.

Start by seeing how much home equity you'd be eligible to borrow here.

Why you should borrow home equity before 2026

You may consider accessing a portion of your home's equity before year's end if you have a considerable amount available to you and are confident that your home value will remain intact or grow over time. "Homeowners are still sitting on record amounts of equity," notes Erik Schmitt, a consumer direct executive at Chase Home Lending. 

"I am seeing an increased amount of inquiries into taking equity out of their home, whether it is a HELOC, home equity loan or a cash-out refinance of the current mortgage," says Jeremy Schachter, branch manager at Fairway Independent Mortgage. "Many borrowers are realizing rates in the ultra-low Covid days are long gone and accepting the fact that current rates are here for a while and not changing anytime soon."

"With rates still expected to continue dropping through the end of 2025, it may be a good time for homeowners who are interested in tapping into their home equity to do so via home equity loans or HELOCs," says Dan Wetzel, senior vice president of mortgage lending at APG Federal Credit Union. "However, homeowners should always consider their current financial needs and their ability to repay the debt before opting to tap into their home equity."

Schmitt points out that, while many homeowners will want to wait for lower rates in 2026, they may not have to if they're interested in opening a home equity line of credit. "Traditional HELOCs typically have variable rates, which means the interest rate will decrease if market rates drop. In this case, there's no need to wait. Customers can access funds when needed and benefit from lower rates if they occur," he says. 

Still, Schmitt cautions that decisions like this still come down to your personal situation. As he put it, "rates are always difficult to predict, so it's important to align your decision with your actual financial needs."

Learn more about your HELOC and home equity loan options here now.

Why you shouldn't borrow home equity before 2026

On the other side of the coin, waiting until 2026 or even longer could pay off if you anticipate home equity loan rates falling further between now and then. Many homeowners are already following that strategy. "I am seeing many borrowers still hold off because they hear in the news that the Fed is considering one more rate cut in 2025 and multiple ones in 2026," says Schachter.

Wetzel also notes that some homeowners may choose to wait, given the potential for lower borrowing costs in the coming year. "There is potential for further rate cuts into 2026, which would lower rates for home equity borrowing even further, but nothing is guaranteed." Remember, however, that waiting for lower rates is generally only applicable for fixed-rate home equity loans. As noted above, a variable-rate HELOC will change on its own and decline in 2026 as long as the rate climate continues that trend.

Your options may depend on your home's value

If you are considering waiting a year or two before cashing equity out of your home, keep a close eye on home values in your area. You'll be in a good equity position if values increase. But if they fall, you might not have as much equity to borrow from as you do now. And you want to avoid borrowing before values decline.

"With every home that sells in your neighborhood, that is a direct comparable sale for your future value. So if your neighbor reduces the sales price, especially in slower months like we are coming into, it may reduce your equity amount," Schachter explains.

Schachter has seen this play out with borrowers first hand. "I recently had a client who wanted to do a refinance and reduce their rate as well as get rid of their mortgage insurance," he says. "They were watching the market carefully and felt that the home values were there to achieve their goals." But when the appraisal came in much lower than expected, even after a rebuttal with additional comps, the value still did not move. The lower appraisal ultimately limited what they were able to accomplish.

The bottom line

Tapping your home equity can be smart now, especially when you use it to improve your financial position, as with a remodeling project or debt consolidation. However, it's not a one-size-fits-all answer. Before proceeding, consult a trusted financial advisor or lender to make sure any loan or credit line aligns with your budget and goals. Run the numbers to ensure you can easily afford repayments. Remember, home equity loans and HELOCs use your home as collateral, so only borrow if you truly need the funds.