3 things to use home equity for this April
Home equity loans and home equity lines of credit (HELOCs) are traditionally worth exploring for homeowners in need of extra financing. But in today's uncertain economic atmosphere, in which inflation is lower but sticky, interest rate cuts are on hold and stock market performance is uneven, they're one of the better ways to borrow a large amount of money. With interest rates on both significantly cheaper than credit cards and personal loans, homeowners can save substantial sums of interest both now and over the repayment period.
Using your home equity, even with an average six-figure amount, however, shouldn't be done hastily. Your home will serve as collateral with the lender, so it's important that you're able to afford repayments, or you could see your home repossessed. So it's critical that you both calculate your potential repayments with precision and use the financing for appropriate purposes. But what would qualify as appropriate purposes now, at the start of April 2025? Below, we'll break down three to consider.
Start by seeing how much home equity you could potentially borrow here.
3 things to use home equity for this April
Not sure if borrowing from your home equity is a smart move this April? In certain instances, it may not be. But if you use your home equity loan or HELOC for one or more of the following, you may find it to be a worthwhile and cost-effective choice:
Debt consolidation
If you're struggling to pay down (or off) high-rate credit card debt (and many are now with credit card interest rates hovering around a record 23%), a home equity loan or HELOC could be the way to get your financial health back on track. Both options have interest rates in the 8% range now, making either almost three times cheaper than the average credit card rate. Not only will this save you significant sums of money but it can also expedite the time it takes to pay the debt off, thanks to that lower interest rate and more money paid toward the balance versus interest.
Still, leveraging your home equity to pay down debt needs to be done cautiously and strategically to avoid putting yourself in a worse financial position than you're already in. Consider speaking to a financial advisor or home equity lending expert who can help guide you.
Chat with a home equity lending professional now.
Certain home repair projects
Not all home repair projects are worth using your home equity for. Some, like ones with a highly specific personal taste that are unlikely to boost your home's value, or others that can easily be paid for out-of-pocket, should be avoided. But other home repairs and projects, like kitchen remodels, bathroom renovations and extensive landscaping, are typically worth using a home equity loan or HELOC for, particularly as you embark on your spring home project journey this April.
That's because if you use a home equity loan or HELOC for these types of projects you can become eligible to deduct the interest paid on the product when you file your next tax return. Not only do other options, like credit cards and personal loans not have this feature, but knowing that home equity products do will then reduce your concerns over the aforementioned interest rates. That makes this a rare win-win this April and spring.
Buy a second home
With the spring homebuying season underway, you may find yourself looking for homes online to buy as a rental or for other purposes. A home equity loan can provide affordable financing in which to realize this purchase. It will need to be done strategically and with care but not only can you buy a second home by using the funds from a home equity loan on your first home, in some cases it's actually the preferred way to do so. So while shopping for that second home or property this April, consider researching your traditional financing options and alternatives like home equity loans or HELOCs, too.
The bottom line
This April could be an optimal time to use your accumulated home equity. With the average home equity level sitting over $300,000 now, and with items like debt consolidation, select home repairs and the purchase of a second home, offering timely uses of the funds, it makes sense to explore your home equity loan and HELOC options carefully today. In some instances, alternative financing sources may be preferable, but in these three specific scenarios, your home equity could be your optimal (and least expensive) option.
