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Is a $50,000 HELOC worth it now?
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Finding an affordable borrowing option has been challenging over the last few years. While rates have been dropping over the last couple of months, the cost of borrowing remains relatively high across the board. For example, the average credit card rate is currently sitting at a record high of over 23%, so if you opt to use this borrowing method, the interest charges will rack up quickly if you don’t pay off what you owe. And while personal loan rates are lower, they still average about 13% right now.
But while low-rate borrowing options are limited overall, there are two good options to consider if you’re a homeowner: home equity loans and home equity lines of credit (HELOCs). Both options allow you to tap into your home’s equity at relatively low rates, but HELOCs, in particular, have been a popular borrowing option recently. That’s because HELOCs offer borrowers a wide range of benefits that other loans don’t offer— and the average HELOC rate is just 8.70% currently, making it one of the most affordable options to consider.
Is it worth it to take out a $50,000 HELOC right now, though? Or would another borrowing option make more sense? That’s what we’ll discuss below.
See what HELOC interest rate you could qualify for here.
Is a $50,000 HELOC worth it now?
For many homeowners who need to borrow $50,000, a HELOC is a borrowing option worth considering in the current market. There are several key reasons why, including:
The payments could get lower over time
Unlike fixed-rate home equity loans, HELOCs come with variable rates, meaning that the interest rates on these credit lines adjust automatically in response to the broader rate environment. That can be a gamble when rates are expected to rise, as the payments could increase if rates climb upward. But that’s not what’s happening right now.
Inflation has been cooling over the last few months and interest rates have been dropping as a result. The Federal Reserve just slashed its benchmark rate again this week, and there are also expectations that additional rate cuts will be made in the near future. If that trend continues, the variable-rate nature of HELOCs could translate to lower monthly payments for borrowers. This makes HELOCs a compelling choice for those looking to minimize long-term interest expenses.
HELOCs offer lots of flexibility
HELOCs also offer inherent flexibility. Unlike a traditional loan, which provides a fixed lump sum of money, a HELOC functions as a revolving line of credit. This means that homeowners can draw from it as needed, only borrowing what they require and paying interest solely on the amount they use. For example, if a homeowner has a HELOC with a $50,000 credit limit but only needs $10,000 to fund a home repair project, they can access that amount without accruing interest on the full credit line.
A HELOC can also be used for almost any purpose. This flexibility allows homeowners to strategically use their HELOC over time without being locked into a single-purpose loan. For instance, the funds from a HELOC can be used for consolidating high-interest debt, such as credit card balances, to reduce monthly payments and total interest costs, but it can also be used for home improvements, medical expenses, education costs or even as a financial cushion for unexpected expenses.
Compare today’s best home equity borrowing rates now.
Most people will still have equity leftover
Another major advantage of opting for a HELOC with a $50,000 limit is that the average homeowner will still have a substantial amount of equity left over. Right now, the average homeowner currently holds about $330,000 in home equity, with about $214,000 of that equity being usable. This means that even after borrowing $50,000, most homeowners will retain significant value in their property.
This preserved equity provides a financial safety net and keeps options open for future borrowing or potential refinancing. Retaining a healthy portion of equity also helps protect homeowners in the event of market fluctuations, as having ample equity can reduce the risk of falling into negative equity (owing more than the home is worth). So for many, using a small portion of their equity for immediate provides a buffer should home values fluctuate or should they need to borrow more down the line.
The bottom line
In today’s unique economic environment, a $50,000 HELOC could be worth considering. After all, this type of borrowing offers a versatile and manageable way for homeowners to leverage their home’s value without losing significant equity or committing to a high-interest loan. That said, it’s important to ensure that you fully understand the possible risks and benefits that come with this type of borrowing so you know it’s the right move for you.
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Canada announced Wednesday it won’t block access to the popular video-sharing app TikTok but is ordering the dissolution of its Canadian business after a national security review of the Chinese company behind it.
Industry Minister François-Philippe Champagne said it is meant to address risks related to ByteDance Ltd.’s establishment of TikTok Technology Canada Inc.
“The government is not blocking Canadians’ access to the TikTok application or their ability to create content. The decision to use a social media application or platform is a personal choice,” Champagne said.
Champagne said it is important for Canadians to adopt good cybersecurity practices, including protecting their personal information.
He said the dissolution order was made in accordance with the Investment Canada Act, which allows for the review of foreign investments that may harm Canada’s national security. He said the decision was based on information and evidence collected over the course of the review and on the advice of Canada’s security and intelligence community and other government partners.
A TikTok spokesperson said in a statement that the shutdown of its Canadian offices will mean the loss of hundreds of local jobs.
“We will challenge this order in court,” the spokesperson said. “The TikTok platform will remain available for creators to find an audience, explore new interests and for businesses to thrive.”
TikTok is wildly popular with young people, but its Chinese ownership has raised fears that Beijing could use it to collect data on Western users or push pro-China narratives and misinformation. TikTok is owned by ByteDance, a Chinese company that moved its headquarters to Singapore in 2020.
TikTok faces intensifying scrutiny from Europe and America over security and data privacy. It comes as China and the West are locked in a wider tug of war over technology ranging from spy balloons to computer chips.
Canada previously banned TikTok from all government-issued mobile devices. TikTok has two offices in Canada, one in Toronto and one in Vancouver.
Michael Geist, Canada research chair in internet and e-commerce law at the University of Ottawa, said in a blog post that “banning the company rather than the app may actually make matters worse since the risks associated with the app will remain but the ability to hold the company accountable will be weakened.”
Canada’s move comes a day after the election in the United States of Donald Trump. In June, Trump joined TikTok, a platform he once tried to ban while in the White House. It has about 170 million users in the U.S.
Trump tried to ban TikTok through an executive order that said “the spread in the United States of mobile applications developed and owned” by Chinese companies was a national security threat. The courts blocked the action after TikTok sued.
Both the U.S. FBI and the Federal Communications Commission have warned that ByteDance could share user data such as browsing history, location and biometric identifiers with China’s government. TikTok said it has never done that and would not, if asked.
Trump said earlier this year that he still believes TikTok posed a national security risk, but was opposed to banning it.
U.S. President Joe Biden signed legislation in April that would force ByteDance to sell the app to a U.S. company within a year or face a national ban. It’s not clear whether that law will survive a legal challenge filed by TikTok or that ByteDance would agree to sell.
The Trump administration could be a boon for business for private prison companies in the U.S. if the president-elect delivers on his promise to crack down on illegal immigration.
CoreCivic and Geo Group, the two biggest private prison operators in the U.S., both contract with the U.S. Immigration and Customs Enforcement (ICE) to house detained, undocumented migrants. Their stocks soared Wednesday following Trump’s election win, with investors betting the companies will see increased profits from a tough-on-immigration administration.
CoreCivic, which closed at $13.50 a share on November 5, is trading at $22 a share, while Geo Group, which closed at $15 a share Tuesday, is currently trading at $23.75.
“Obviously, investors believe there is going to be a significant increase in opportunity for both of these firms under the Trump administration,” Noble Capital Markets analyst Joe Gomes told CBS MoneyWatch.
Geo Group executives acknowledged on the company’s third-quarter earnings call Thursday that it expects the incoming administration to enact stricter border security policies and that the company stands “ready to provide additional resources to help ICE meet future needs.”
CoreCivic executives also said they believe the election result will drive demand for its services.
ICE is biggest customer
During Trump’s first term in office, from 2017-2021, immigration detention expanded at record levels, according to an ACLU report. In 2019, ICE detained an average of over 50,000 people each day. At times, that number exceeded 56,000 — about 50% more than peak levels during the Obama administration, according to the report. During his first term in office, Trump expanded the federal government’s use of private prison companies to detain immigrants.
As of January 2020, 81% of people detained in ICE custody across the U.S. were held in facilities owned or managed by private prison corporations, according to the ACLU report.
In his second term, President-elect Trump promises a radical shift in policy at the U.S.-Mexico border from his predecessor. That includes a pledge to oversee the largest deportation operation in American history, which could bring significantly more business to CoreCivic and Geo Group.
For the first nine months of 2024, ICE accounted for 30% of each company’s revenue.
Both Geo Group and CoreCivic said they currently have excess capacity to accommodate a larger population of detainees. CoreCivic executives noted that they’re taking steps to prepare to activate additional capacity to meet ICE’s needs. That could include reconfiguring facilities to accommodate a bigger intake area, they noted.
“There is room for an uptick in occupancy from a capacity standpoint and both companies expect an ask from the Trump administration for more beds. The question is how much, and we just don’t know right now,” Wedbush Securities analyst Brian Violino told CBS MoneyWatch.
Monitoring
Geo Group also provides monitoring services for ICE under its Intensive Supervision Appearance Program (ISAP), a monitoring program using wearable technology that serves as an alternative to detention.
“If there is a finite number of beds and a significant number of people are detained, which Trump is discussing in his plans, there could be an increased usage in this alternative to detention,” Violino said.
Geo Group executives said they have the necessary technology and staffing resources to scale up the contract to more than several million participants, if necessary.
Funding from Congress
The degree to which ICE expands its contracts with the two largest private prison companies depends on how big of an increase in funding Congress authorizes. While Republicans won the Senate majority in Tuesday’s election, it remains to be seen which party will obtain control of the U.S. House of Representatives.
“That’s a big part of the story, and if it’s a Republican sweep, it will be easier for Trump to get funding from Congress to support this operation he’s looking to do,” Violino said.
