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Timing is everything, especially when it comes to borrowing money. As borrowers well know, the past few years have not been ideal for those in need of additional financing. Mortgage interest rates rose to its highest level in decades and has fallen only slightly since then. Credit card interest ratesmeanwhile, just broke a new record, passing 23%. Even personal loan rates are approaching 13% for qualified borrowers, and higher for those who do bad credit.
Home equity borrow, whether or not via a equity loan or home equity line of credit (HELOC)however, has been significantly more cost-effective than these alternatives. Yet they are not immune to broader trends, making the timing around an application crucial to get it right. And with just a few weeks left in 2024, potential home equity borrowers should consider taking steps now at the right time. Below we highlight three of them.
Start by seeing what low mortgage interest rates you could qualify for here.
Three steps to increase home values before 2025
With little time left before the end of the year, homeowners considering accessing their home equity should consider the following steps now:
Choose a mortgage loan over a HELOC
Inflation rose only slightly in October And while it’s too early to tell whether this is part of a broader trend or a signal of more trouble to come, it’s not what borrowers need. After all, higher inflation has led to this higher interest rates on a variety of loan products, including mortgage loans. And if tariffs are raised again, tariffs on these products will inevitably follow suit.
So it is advantageous to choose a mortgage loan over a HELOC in these circumstances. The former has one fixed interest rate that will not change over the life of the loan, while the latter has a variable that will change every month. And now that inflation is rising and there is a chance that interest rates will remain stable (or even rise), a fixed interest rate is safer. Moreover, the average mortgage interest rate of 8.41% In any case, it is lower than the 8.61% currently associated with HELOCs.
Get started online with a mortgage loan today.
Shop around for lenders
Did you know? You do not have to use your current mortgage provider Want to tap into the equity in your home? So with this flexibility, and with the average equity of the home is currently high, it is wise to look for lenders as quickly as possible. It may take weeks or even months for your money to be paid out. So by shopping around now for the best rates and terms, you may be able to get approved before the end of the year, so you can use the money as needed within weeks. And this will position you for other benefits as well.
Apply now (if using for home projects)
If you know you plan to use your mortgage loan for a home project, you should apply now (assuming your credit score applies). Here’s why: Interest paid on both mortgage loans And HELOCs are tax deductible if used for eligible home repairs and improvements. But if you wait much longer to file and get approval in 2025, or just use the money that year, you’ll be delaying a crucial tax deduction until you can file your next return in 2026. This is perhaps one of the most important assets in your home. to take steps in the last weeks of the year, assuming this is the intended purpose of the financing.
Read more about your potential tax benefits for your mortgage loan here.
The bottom line
For many homeowners, the time is still right to access their home equity. However, to increase their chances of financial success, they should strongly consider taking the above steps now, before January 1, 2025. By opening a home equity loan through a HELOC, shopping around for the best rates and terms, and opening the loan now to By taking advantage of the potential tax benefits in 2024, borrowers will better position themselves for success, both on the short term, in 2025 and in the years to come.
