Why you should use home equity for fall projects
Fall is just around the corner. Back-to-school sales are in full swing, pumpkin spice is back on coffee shop menus and temperatures are starting to feel more manageable. It's also a great time to finally tackle those home projects you've been putting off.
Whether you're winterizing your home or replacing an old roof, home repairs and improvements can get expensive. Fortunately, if you've lived in your home long enough to build up sufficient equity, you can use that equity to finance these projects easily and cost-effectively.
Check out today's home equity rates here.
Why you should use home equity for fall projects
Here's why you should consider tapping into your equity for your home projects this fall.
Low interest rates
Home equity products like home equity loans and home equity lines of credit (HELOCs) offer considerably lower interest rates than other financing options. For example, as of August 29, 2023, the average credit card interest rate is over 20%, and the average personal loan rate is around 11%. Home equity loan and HELOC rates, however, average between about 8.5% and 9%.
This difference can save you hundreds of dollars in interest over the course of repaying your loan, making any home project more affordable.
Compare current home equity options online now.
Tax-deductions
Depending on how you use your home equity funds, you may qualify for a tax deduction, lowering your overall cost. No other financing option offers this perk.
"Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer's home that secures the loan," the IRS says. "The loan must be secured by the taxpayer's main home or second home (qualified residence), and meet other requirements.
It's important to consult with a tax professional to determine your project's eligibility before getting started.
Flexibility
There are several ways to pull from your home equity, giving you the flexibility to choose the terms that best suit your needs.
For instance, home equity loans provide a lump-sum payment you begin repaying immediately. They can be great for one-time projects you already have an estimate for, such as a roof repair.
HELOCs, on the other hand, are a revolving line of credit you can draw from as needed, and you only repay the amount you borrow. They can be better for ongoing projects like remodeling several rooms in a row.
Find out how much you could borrow from your home equity today.
Increased home value
Home projects can make your living space more functional and enjoyable in the here and now. But they can also boost your home's value.
Home improvements like kitchen remodels, additions and even fresh paint can all make your home more attractive to prospective buyers, making it easier to recoup your investment if you sell your home later on.
The bottom line
Using your home equity to fund fall projects can be a smart way to improve your home now while also increasing its value for the future. With low interest rates, potential tax deductions and several options to choose from, products like home equity loans and HELOCs can make your vision for your home a reality without putting too much strain on your finances.
But, as with any financial decision, it's important to do your research before taking out a loan or line of credit. Research your options, compare rates and terms and make sure any monthly payments will fit comfortably into your budget. With the right planning, you can get your home in tip-top shape this fall so you can enjoy it more in the years to come.
