CBS News
Will a HELOC or home equity loan be better this November?
Her hakki Hasan EROGLU’na aittir/Getty Images
With the average amount of home equity near a record of approximately $330,000 right now, homeowners have a large amount of money to utilize as they see fit. Whether they use those funds to pay for a wedding, a college education or to consolidate high interest credit card debt, home equity is often the smart way to do so. And it’s one of the least expensive alternatives, now that credit card interest rates are near 23% while personal loan rates are approaching 13%.
While there are multiple ways to tap into your home equity, from cash-out refinancing to reverse mortgages, two of the more attractive options right now are home equity loans and home equity lines of credit (HELOCs). Although both offer borrowers inexpensive ways to tap into their equity, they don’t operate in precisely the same way – and their interest rates aren’t identical, either. Going into November, then, when another cut to the federal funds rate is anticipated, which will be better for borrowers? That’s what we’ll break down below.
See how low of a home equity loan rate you could secure here.
Will a HELOC or home equity loan be better this November?
While the benefits of each of these home equity options depend on the individual borrower profile, there are some timely elements to account for this November. Here’s what to consider:
Why a HELOC could be better this November
If you’re a borrower determined to take advantage of the lowest interest rate possible then it makes sense to pursue a HELOC this November instead of a home equity loan – despite the latter have the slightly lower interest rate. Here’s why: HELOCs have variable interest rates that will change monthly as the overall rate climate evolves. This is a distinct advantage this November and, likely, in the months to come as interest rate cuts continue to be issued.
So the 8.69% HELOC rate you open the line of credit with today could be lower in December, January and beyond. The 8.35% home equity loan rate, however, will need to be refinanced to secure any future rate savings. And you’ll need to pay refinancing costs to get that rate (often 1% to 5% of the total loan value). So, in short, if you want to be best positioned to capitalize on future interest rate cuts, a HELOC could be better for you this November.
Why a home equity loan could be better this November
If waiting for rates to be cut – and there’s no guarantee that they will or by how much – is too risky for your financial circumstances, then a home equity loan could be better this November. These loans do come with a slightly lower interest rate than HELOCs, which may seem marginal on paper but can add up to substantial savings over a 10 or 15-year repayment period.
But they’ll also protect you against any future interest rate volatility, making your monthly payments in December and beyond easy to budget for. And if rates wind up dropping by a significant amount in the winter or spring of 2025, you could always refinance then – while still gaining access to the low interest rate funding you need this fall.
The bottom line
The choice between a HELOC or a home equity loan this November is a personal one, largely dependent on your financial situation and appetite for rate volatility. No matter which option you ultimately choose, however, be sure to only withdraw an amount of equity that you can easily afford to repay. With the average amount of home equity high now, it may be tempting to overborrow. But that would be a mistake since your home is collateral in this borrowing exchange and you could wind up losing it if unable to repay all that you’ve withdrawn.
Have more question about your home equity loan options this November? Learn more here.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Getty Images
Gold’s meteoric rise in 2024 has captured the attention of investors across the globe, as the precious metal has shattered numerous price records and posted gains of about 33% year-to-date — far outpacing the returns on more traditional investments. This remarkable performance hasn’t just been appealing to seasoned investors, either. It has also sparked interest among newcomers to the investment world, many of whom see the potential for significant returns in an asset traditionally known more for stability than dramatic growth.
The allure of gold in today’s market is understandable. Watching an investment vehicle post consistent gains can make the decision to invest seem straightforward, particularly for those just beginning their investment journey. However, the decision to invest in gold requires more nuanced consideration than simply following market momentum. While gold’s recent performance might suggest an easy path to profits, its role in an investment portfolio is complex and multifaceted.
And the current market dynamics present both opportunities and challenges for beginners, in particular. After all, the confluence of factors driving gold’s price appreciation creates a complex landscape that can be difficult to navigate. So should beginners take the plunge and add gold to their portfolios this November? That’s what we’ll break down below.
Compare your gold investing options here.
Should beginners invest in gold this November?
While the decision to invest in gold is ultimately a personal one based on factors like your investment goals and diversification needs, there are a few good reasons to consider buying in as a beginner, including:
The potential for short-term price growth
Gold is typically seen as a long-term investment, but the past year has presented a unique opportunity for short-term gains. The price of gold has surged from about $2,064 per ounce on January 1 to where it sits today at about $2,745 per ounce (as of October 24, 2024). And while that’s an impressive price run, there’s a good chance it’s not over. Many analysts expect that the price of gold could exceed $3,000 by the end of the year, meaning that beginners have a rare chance to invest now and potentially turn a quick profit in the coming weeks or months.
So, if you’re new to investing and looking for a way to capitalize on market trends, gold could provide a relatively low-risk opportunity for significant returns in the short term. While it’s generally advisable to hold onto gold for the long run, current market conditions offer a window for quicker profits, making this November an opportune time to get involved.
Protect your portfolio with gold today.
The protections it offers during uncertain times
Geopolitical tensions are running high as the year draws to a close, with conflicts and global uncertainty making financial markets more unpredictable. That’s where gold can come in handy, especially for beginners. Gold has historically been seen as a safe haven during times of geopolitical unrest, as its value tends to rise when other assets face volatility or decline due to external shocks. So for beginners looking to safeguard their portfolios against unpredictable global events, gold offers a layer of protection.
Whether it’s trade disputes, political instability or other conflicts, these factors can negatively affect traditional assets like stocks and bonds. By investing in gold, beginners can shield their portfolios from sudden downturns caused by such events. November is an especially relevant time to consider this, as upcoming political events could lead to more market swings. Owning gold in such times provides a cushion against potential disruptions.
The affordability and accessibility it offers
Another appealing aspect of investing in gold as a beginner is the variety of ways you can invest in it. Whether your goal is to buy physical gold, invest in a digital asset like a gold exchange-traded fund (ETF) or gold stocks or something else entirely, gold can be an accessible option regardless of your budget, as there are plenty of opportunities to get exposure without needing a large sum of money upfront.
For beginners, this flexibility is a huge advantage. You can start small by purchasing fractional shares of gold ETFs or gold-based mutual funds, allowing you to dip your toes into the precious metal market without committing significant capital. This makes November an ideal time for new investors, as it allows you to participate in the ongoing price surge while tailoring your investment to your financial situation.
The bottom line
Investing in gold this November presents a unique opportunity for beginners. Whether you’re looking to turn a quick profit as gold prices continue to rise or are simply trying to find an affordable, accessible entry point into the precious metals market, gold offers both short-term and long-term benefits. By adding gold to your portfolio, you’ll also gain valuable diversification that can help protect your investments during periods of economic uncertainty. As with any type of investment, though, just make sure you’ve fully researched your options and are sure it’s the right move for your money.
