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Should you lock in a home equity loan rate with inflation cooling? Experts weigh in

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Locking in a home equity loan rate could make a lot of sense right now, even with inflation cooling.

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The latest Consumer Price Index report shows that inflation in April was 3.4%, a 0.1% drop from March. While that drop isn’t as significant as many people hoped for, any improvement to the inflation rate is a welcome one in today’s economic environment. After all, a drop in the inflation rate means we could be making headway, which could result in lower borrowing and consumer goods costs at some point down the line. 

But even with inflation still persistent, and borrowing rates still high, many homeowners are thinking about tapping into their home’s equity right now. After all, the average homeowner has $299,00 in equity currently, and that home equity can be borrowed against at a low rate compared to many other loan options using a home equity line of credit (HELOC) or a home equity loan.

But when it comes to home equity loans in particular, you can use these fixed-rate loans for nearly any purpose, such as paying down high-interest debt or making home improvements. However, does it really make sense to lock in a home equity loan rate now while inflation is cooling? Here’s what you should know. 

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Should you lock in a home equity loan rate with inflation cooling? Experts weigh in

Here are some reasons that locking in a home equity loan rate now could be a wise move, according to some experts.

You can protect against future rate increases

Locking in a home equity loan rate now could protect you from today’s uncertain rate landscape — one in which future rate hikes could still be on the table. 

“Given the current economic landscape and the potential for interest rates to rise, locking in today’s home equity loan rates can be a wise decision,” says Ralph Adamo, ChFC, CEO and founder of Integrity Wealth Management. “By securing a fixed rate now, borrowers can avoid the uncertainty and potential cost increases associated with future rate hikes.”

After all, the current inflation rate is still higher than the Fed’s 2% target. And, if inflation stays high or grows in the future, future rate hikes aren’t off the table as had been expected at one point early in 2024. 

“While inflation has certainly taken a turn for the better, there’s currently no consensus on when the FOMC will move interest rates again,” says John Darby, certified financial planner and associate at Graham Capital Wealth Management. “If — and it’s a big if — a person locked in fixed rates today and the next move out of the FOMC is a rate increase, then they’d be in a better position than waiting.”

But if you lock in a home equity loan rate now, you can avoid potential rate increases if they happen in the future. That’s because home equity loans come with fixed rates, so the rate you get when you take out your loan will remain your interest rate until your home equity loan is repaid or you refinance it.

Adamo says a home equity loan’s fixed rate is one big advantage it has over adjustable-rate loans like HELOCs. 

“Unlike a HELOC, which has a rate that fluctuates based on economic conditions, a fixed-rate loan eliminates the risk of payment shocks due to rising interest rates,” says Adamo.

Find out today’s top home equity loan rates and learn more about your options here.

Rates are still lower comparatively

And, even in today’s high-interest rate environment, average home equity loan rates are still lower than average rates for many loans and adjustable-rate products like credit cards. While the average rate for a home equity loan is currently 8.61%, the average credit card account assessed interest is 22.63%, according to the latest Federal Reserve data. In turn, opting for a home equity loan in today’s rate environment can result in big savings compared to your other options. 

It could also lead to big savings depending on how you use the home equity loan funds you receive. For example, by locking in a home equity loan rate now and using the funds to pay off credit card debt, you could save a substantial amount of money on interest. 

And, making this move now instead of waiting to see what happens with rates in the future could be smart. After all, securing a lower rate on a home equity loan now could help you get rid of your high-interest credit card debt before a potential rate increase leads to higher average credit card rates — and potentially higher home equity loan rates.

“A home equity loan might be worthwhile if you use the funds to pay off other loans at higher rates, such as credit card debt or unsecured personal loans,” says Larson Patty, a certified financial planner and EA at Rothman Investment Management.

The bottom line

While inflation cooled last month, there’s still a possibility that the Fed could increase rates in the future to try and temper inflation, especially if it stays higher than is optimal. But if you have enough equity in your home and need to borrow money, locking in a home equity loan rate now protects you against potential rate increases that could occur in the future. It can also help you refinance variable-rate debt like credit cards to a lower-rate loan. That said, before you take out a home equity loan, consider the advantages and disadvantages, as defaulting on what you owe can have big consequences, including losing your home to foreclosure.



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Tajikistan nationals with alleged ISIS ties removed in immigration proceedings, U.S. officials say

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When federal agents arrested eight Tajikistan nationals with alleged ties to the Islamic State terror group on immigration charges back in June, U.S. officials reasoned that coordinated raids in Los Angeles, New York and Philadelphia would prove the fastest way to disrupt a potential terrorist plot in its earliest stages. Four months later, after being detained in Immigration and Customs Enforcement (ICE) facilities, three of the men have already been returned to Tajikistan and Russia, U.S. officials tell CBS News, following removals by immigration court judges. 

Four more Tajik nationals – also held in ICE detention facilities – are awaiting removal flights to Central Asia, and U.S. officials anticipate they’ll be returned in the coming few weeks. Only one of the arrested men still awaits his legal proceeding, following a medical issue, though U.S. officials speaking on the condition of anonymity to discuss the sensitive proceedings indicated that he remains detained and is likely to face a similar outcome. 

The men face no additional charges – including terrorism-related offenses – with the decision to immediately arrest and remove them through deportation proceedings, rather than orchestrate a hard-fought terrorism trial in Article III courts, born out of a pressing short-term concern about public safety. 

Soon after the eight foreign nationals crossed into the United States, the FBI learned of the potential ties to the Islamic State, CBS News previously reported. The FBI identified early-stage terrorist plotting, triggering their immediate arrests, in part, through a wiretap after the individuals had already been vetted by U.S. Customs and Border Protection, law enforcement sources confirmed to CBS News in June. 

Several months later, their removals following immigration proceedings mark a departure from the post-9/11 intelligence-sharing architecture of the U.S. government. 

Now facing a more diverse migrant population at the U.S.-Mexico border, a new effort is underway by the Department of Homeland Security, Department of Justice and the Intelligence Community to normalize the direct sharing of classified information – including some marked top-secret – with U.S. immigration judges. 

The more routine intelligence sharing with immigration judges is aimed at allowing U.S. immigration courts to more regularly incorporate derogatory information into their decisions. The endeavor has led to the creation of more safes and sensitive compartmented information facilities – also known as SCIFs – to help facilitate the sharing of classified materials. Once considered a last resort for the department, Secretary Alejandro Mayorkas has sought to use immigration tools, in recent months, to mitigate and disrupt threat activity.

The immigration raids, back in June, underscore the spate of terrorism concerns from the U.S. government this year, as national security agencies point to a system now blinking red in the aftermath of the Oct. 7 attacks by Hamas on Israel, with emerging terrorism hot spots in Central Asia. 

A joint intelligence bulletin released this month, and obtained by CBS News, warns that foreign terrorist organizations have exploited the attack nearly one year ago and its aftermath to try to recruit radicalized followers, creating media that compares the October 7 and 9/11 attacks and encouraging “lone attackers to use simple tactics like firearms, knives, Molotov cocktails, and vehicle ramming against Western targets in retaliation for deaths in Gaza.”

In May, ICE arrested an Uzbek man in Baltimore with alleged ISIS ties after he had been living inside the U.S. for more than two years, NBC News first reported. 

In the past year, Tajik nationals have engaged in foiled terrorism plots in Russia, Iran and Turkey, as well as Europe, with several Tajik men arrested following March’s deadly attack on Crocus City Hall in Moscow that left at least 133 people dead and hundreds more injured. 

The attack has been linked to ISIS-K, or the Islamic State Khorasan Province, an off-shoot of ISIS that emerged in 2015, founded by disillusioned members of Pakistani militant groups, including Taliban fighters. In August 2021, during the U.S. military withdrawal from Afghanistan, ISIS-K launched a suicide attack in Kabul, killing 13 U.S. service members and at least 170 Afghan civilians. 

In a recent change to ICE policy, the agency now recurrently vets foreign nationals arriving from Tajikistan, Uzbekistan and other Central Asian countries, detaining them while they await removal proceedings or immigration hearings.

Only 0.007% of migrant arrivals are flagged by the FBI’s watchlist, and an even smaller number of those asylum seekers are ultimately removed. But with migrants arriving at the Southwest border from conflict zones in the Eastern Hemisphere, posing potential links to extremist or terrorist groups, the White House is now exploring ways to expedite the removal of asylum seekers viewed as a possible threat to the American public. 

“Encounters with migrants from Eastern Hemisphere countries—such as China, India, Russia, and western African countries—in FY 2024 have decreased slightly from about 10 to 9 percent of overall encounters, but remain a higher proportion of encounters than before FY 2023,” according to the Homeland Threat Assessment, a public intelligence document released earlier this month. 

A senior homeland security official told reporters in a briefing Wednesday, that the U.S. is engaged in an “ongoing effort to try to make sure that we can use every bit of available information that the U.S. government has classified and unclassified, and make sure that the best possible picture about a person seeking to enter the United States is available to frontline personnel who are encountering that person.”

Approximately 139 individuals flagged by the FBI’s terror watchlist have been encountered at the U.S.‑Mexico border through July of fiscal year 2024. That number decreased from 216 during the same timeframe in 2023. CBP encountered 283 watchlisted individuals at the U.S.-Canada border through July of fiscal year 2024, down from 375 encountered during the same timeframe in 2023.

“I think one of the features of the surge in migration over recent years is that our border personnel are encountering a much more diverse and global population of individuals trying to enter the United States or seeking to enter the United States,” a senior DHS official said. “So, at some point in the past, it might have been primarily a Western Hemisphere phenomenon. Now, our border personnel encounter individuals from around the world, from all parts of the world, to include conflict zones and other areas where individuals may have links or can support ties to extremist or terrorist organizations that we have long-standing concerns about.”

In April, FBI Director Christopher Wray warned that human smuggling operations at the southern border were trafficking in people with possible connections to terror groups.

“Looking back over my career in law enforcement, I’d be hard-pressed to think of a time when so many different threats to our public safety and national security were so elevated all at once, but that is the case as I sit here today,” Wray, told Congress in June, just days before most of the Tajik men were arrested.

The expedited return of three Tajiks to Central Asia required tremendous diplomatic communication, facilitated by the State Department, U.S. officials said.  

Returns to Central Asia routinely encounter operational and diplomatic hurdles, though regular channels for removal do exist. According to agency data, in 2023, ICE deported only four migrants to Tajikistan.

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