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4 smart times to tap into your home equity in 2024
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Homeownership can be a valuable asset that can go well beyond providing shelter. For many homeowners, their property represents a substantial portion of their net worth — and that’s especially true right now. Thanks to the unique housing market environment that occurred over the last few years, the average homeowner currently has about $200,000 in tappable home equity.
One way to leverage this value is by borrowing from that home equity, which can be a strategic financial move when done thoughtfully. And, there are specific smart times when accessing your home equity could make a lot of sense this year. Let’s explore these opportunities and the potential considerations involved.
Ready to borrow from your home’s equity? Explore your home equity loan options online here.
4 smart times to tap into your home equity in 2024
There are a few times it could make sense to tap into your home’s equity this year, including:
To enhance your home’s value
Investing in your property through home improvement projects is a classic and smart reason to tap into your home equity. Whether it’s remodeling the kitchen, adding a new bathroom or upgrading your outdoor space, these enhancements not only improve your living experience but also increase the value of your home.
And, with home equity loan interest rates still relatively low compared to other types of loans, using home equity for renovations can be a cost-effective way to boost your property’s overall worth.
Before proceeding, though, it’s crucial to estimate the potential return on investment (ROI) for the planned improvements. Some renovations offer a higher ROI than others, so prioritize projects that align with both your lifestyle needs and the potential for increasing your home’s value.
Find out the home equity loan rates you could qualify for here.
To streamline your finances with debt consolidation
Another strategic use of home equity is to consolidate high-interest debt. If you have multiple outstanding loans or credit card balances with high interest rates, using your home equity to pay off these debts can be a savvy financial move — especially right now.
After all, rates on credit cards and other variable-interest loans have skyrocketed over the last couple of years, so your debt may be costing you a lot more than you bargained for. But home equity loans or home equity lines of credit (HELOCs) typically have lower interest rates compared to credit cards or personal loans, allowing you to streamline your debts and potentially save money on interest payments.
However, it’s also essential to exercise caution and address the root cause of the debt issue. If overspending or financial mismanagement is the underlying problem, tapping into home equity might provide temporary relief but may not solve the fundamental financial challenges.
To manage education expenses
As education costs continue to rise, many homeowners are turning to their home equity to fund education expenses for themselves or their children. Using home equity to finance education can be a strategic investment in the future, especially if it leads to increased earning potential. However, it’s crucial to consider the long-term financial implications and have a solid repayment plan.
Homeowners can explore options such as a HELOC with flexible repayment terms to manage education-related expenses. That said, it’s also advisable to explore other financing options, such as scholarships, grants or federal student loans, before tapping into home equity.
To create a financial safety net
In uncertain economic times, having a financial safety net is essential. And, tapping into home equity to establish or bolster an emergency fund can provide peace of mind and financial security. This can be particularly relevant if you anticipate changes in income or foresee potential expenses, such as medical emergencies or unexpected home repairs.
Before using home equity for an emergency fund, though, be sure to carefully assess your financial situation and ensure that you have a realistic repayment plan. It’s crucial to strike a balance between leveraging your home equity for financial security and avoiding unnecessary risks.
How to decide if a home equity loan is right for you
While tapping into your home equity can be a strategic financial move, it’s essential to evaluate whether a home equity loan is the right option for your specific situation.
- Assess your financial goals: Clearly define your financial goals and objectives. Whether it’s funding a home improvement project, consolidating debt or covering education expenses, understanding your priorities will guide your decision-making process.
- Calculate your loan-to-value (LTV) ratio: The LTV ratio is a crucial factor in determining your eligibility for a home equity loan. Lenders typically prefer an LTV ratio below 80%, so ensure that your home has sufficient equity.
- Evaluate interest rates and terms: Compare interest rates and terms offered by different lenders. While home equity loans often have lower interest rates than unsecured loans, it’s essential to understand the specific terms, repayment schedule and any associated fees.
- Consider potential risks: Since your home serves as collateral, failure to repay the loan could result in foreclosure. Assess your ability to meet the repayment terms and consider the impact on your overall financial stability.
- Review alternative financing options: Compare the terms, interest rates and repayment flexibility of various options. Depending on your needs, personal loans, credit cards or other financing arrangements may be more suitable.
- Understand tax implications: Familiarize yourself with the tax implications of a home equity loan. In some cases, the interest paid on home equity loans may be tax-deductible.
- Create a repayment plan: Develop a clear and realistic repayment plan and consider factors such as your current income, future earning potential and any potential changes in your financial situation. A well-thought-out repayment plan will ensure that you can meet your obligations without undue financial strain.
- Evaluate current economic conditions: Changes in interest rates, housing market trends and economic stability can impact the overall cost and feasibility of a home equity loan.
The bottom line
Tapping into your home equity can be a strategic financial move when done at the right times and for the right reasons. Whether it’s improving your home, consolidating debt, investing in education or creating a financial safety net, careful consideration and planning are key when borrowing from your home’s equity. Before making any decisions, it may help to explore alternative financing options to ensure that tapping into your home equity aligns with your overall financial goals and enhances your financial well-being in 2024 and beyond.
An Israeli airstrike hit a mosque in central Gaza and Palestinian officials said at least 19 people were killed early Sunday. Israeli planes also lit up the skyline across the southern suburbs of Beirut, striking what the military said were Hezbollah targets.
The strike in Gaza hit a mosque where displaced people were sheltering near the main hospital in the central town of Deir al-Balah. Another four people were killed in a strike on a school sheltering displaced people near the town.
The Israeli military said both strikes targeted militants, without providing evidence.
An Associated Press journalist counted the bodies at the Al-Aqsa Martyrs Hospital morgue. Hospital records showed that the dead from the strike on the mosque were all men, while another man was wounded.
In Beirut, the strikes reportedly targeted a building near a road leading to Lebanon’s only international airport and another formerly used by the Hezbollah-run broadcaster Al-Manar.
Hussein Malla / AP
Israel and Hezbollah have traded fire across the Lebanon border almost daily since the day after Hamas’ cross-border attack on Oct. 7, 2023, which killed 1,200 Israelis and took 250 others hostage. Israel declared war on the Hamas militant group in the Gaza Strip in response. As the Israel-Hamas war reaches the one-year mark, nearly 42,000 Palestinians have been killed in the territory, and just over half the dead have been women and children, according to local health officials.
Nearly 2,000 people have been killed in Lebanon in the latest conflict, most of them since Sept. 23, according to the Lebanese Health Ministry.
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With just a month to go before Election Day, Sabrina German sees herself as an essential worker for democracy. The director of voter registration in Chatham County, Ga., German has found herself in the spotlight as she works to comply with sweeping changes to state election rules in this critical battleground state.
“The first three words in the preamble, it says, ‘We, the people,’ meaning that we, as public servants, we are working for the people to make sure that they have a fair choice and a voice for the candidates that they’re choosing,” German said.
The overhaul in Georgia has many fronts, from the Republican majority on the state election board, to the Georgia legislature, which has made it possible for individuals to file a flurry of challenges to the voter rolls.
German said she had a thousand challenges to voter registrations in just one county.
Attorney Colin McRae, who chairs the non-partisan County Registration Board (on which he has served for two decades), said, “It doesn’t take Sherlock Holmes to figure out the agenda behind some of the challenges,” he said. “In a recent set of names that were submitted to us, it included hundreds of college students. And it didn’t take a lot of research to figure out that all of the college students whose registrations were being challenged, all attended Savannah State University, [a] historically Black university.”
While these issues might seem local, they have a national political charge; and former President Trump has weighed in on the campaign trail, praising Republicans on Georgia’s election board. “They’re on fire,” he said. “They’re doing a great job. Three members. Three people are all pit bulls fighting for honesty, transparency and victory. They’re fighting.”
“Sunday Morning” reached out to the members of Georgia’s election board praised by Trump. They have long defended their work, and one member told us the controversy over their efforts is “manufactured to suit some other agenda.”
What’s happening in Georgia is just one example of how challenges to the vote are roiling the nation. And the question remains: Are recent changes to state election laws addressing real problems? Or, is it just politics?
David Becker, a CBS News contributor who directs the non-partisan Center for Election Innovation and Research in Washington, D.C., said, “I’ve been looking and researching the quality of our voter lists for about 25 years now, and there’s no question that, right now, our voter lists are as accurate as they’ve ever been.”
So, what is fueling suspicion of voter rolls? “We see a lot of their claims about the elections driven just by outcomes,” said Becker. “They’re not about the actual process.
“The voter lists are public. They could have challenged these things in 2023 or 2021 or 2019. They’re waiting until right before the election, which tells you that they’re not actually interested in cleaning up the lists. What they’re really trying to do is to set the stage for claims that an election was stolen after, presumably, their candidate loses.”
The 2020 election still casts a long shadow. State officials like Brad Raffensperger, Georgia’s Republican Secretary of State, are bracing themselves for another contsted election.
On January 2, 2021, Raffensperger got an infamous call from then-President Trump asking if he’d “find” votes so Trump could win. “All I want to do is this: I just want to find, uh, 11,780 votes, which is one more that we have, because we won the state,” Trump said in a recorded conversation.
Raffensperger resisted pressure to not certify the 2020 election in Georgia. Asked if he would resist pressure again, he said, “I’ll do my job. I’ll follow the law, and I’ll follow the Constitution.”
Raffensperger will once again oversee and certify Georgia’s elections. Asked whether he believes any of the changes put forth by the election board are necessary, Raffensperger replied, “No. Not one.”
Raffensperger says voting is safe and secure in Georgia. Asked why the election board members keeps making changes to the rules, he said, “I think that many of them are living in the past, and they can’t accept what happened in 2020.”
Bloomsbury
Carol Anderson, an author and voting rights activist who teaches at Emory University, said, “One of the things about voter suppression is that it always looks innocuous, it always looks reasonable, except it’s not. What’s happening in Georgia with voting rights is that, you have a massive change of demography happening. So, you have a growing African-American population. You have a sizable Latino population. You have a sizable and engaged Asian-American population.
“And so, it is a power clash between a vision of a new Georgia and … the vision of the old Georgia, our old ways,” she said.
Chatham County’s Sabrina German said, because of the pressures on election workers, she thinks about leaving every day. German may be weary, but she and Colin McRae say their experience in 2020 has prepared them for whatever comes next.
McRae said he took it personally when Donald Trump asked the secretary of state to “find” 11,000 votes to put him over Joe Biden. “Of course, we took it personally; any criticism of the system is a criticism of the individuals who make up that system,” said McRae. “Again, the truth will come out. The truth will win out.”
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Story produced by Ed Forgotson. Editor: Carol Ross.
