If you’ve been searching for an inexpensive way to borrow money lately, you may have found yourself spending a lot of time looking around. That’s because inflation, even though it’s dropped significantly, and the higher interest rates meant to tame it, have caused rates on a multitude of credit options to soar. But if you’re one of the tens of millions of homeowners in the United States right now, you still have one cost-effective alternative to pursue – your home equity.

With a home equity loan or home equity line of credit (HELOC), owners can tap into the equity they’ve accumulated in their homes to then use for any expense they see fit (or to even pay off or consolidate other, higher-interest debt). Like all financial products and services, however, home equity borrowing needs to take place at the right time for it to be truly beneficial for owners. And, this July, could be one of those times. Below, we’ll detail three reasons why you may want to tap into your home equity now.

Start by seeing what home equity loan rate you could secure here today.

3 reasons to access your home equity this July

If you want to truly optimize your home equity borrowing situation, it makes sense to act promptly. Here are three timely reasons to access your equity this July:

You may have a lot to utilize

The average homeowner has around $305,000 worth of equity right now. And while they may not be able to borrow all of that (home equity borrowing is typically capped at 80% to 85% of your overall equity), it still adds up to a sizable amount of money that can be easily accessed with a loan or HELOC. 

However, the amount of equity you have is subject to change and could fall or rise in the future, partially based on economic factors out of your control. So it’s beneficial to act now, with home equity levels near record levels. If you wait, and the economics change, you’ll have less to work with than if you had acted this July.

Find out how much home equity you have to access here.

Rates are lower and could drop further

Home equity loan and HELOC rates are both under 10% right now — with the prospect for both to drop even further. A formal cut to the federal funds rate would ensure that rates on both products fall. But another cooling in the inflation rate (the next report comes out July 11) could cause lenders to offer lower rates now in anticipation of an official cut to come later in the year. So this could be an opportune time to act, particularly if you proceed with a HELOC this July, which comes with a variable interest rate that could drop even further (you’ll need to refinance a home equity loan to get a better rate). 

The alternatives are (still) too expensive

As mentioned above, the search for cost-effective credit options is an arduous one right now. Credit cards come with rates over 21% right now and personal loans are around 12%. And that’s for qualified borrowers with clean credit histories and high credit scores. If you don’t have both, you may get offered even higher rates than those two averages. With these as the popular alternatives, then, a home equity loan or HELOC may be your cheapest option this July.

The bottom line

While home equity loan and HELOC rates have been lower in recent years, they’ve also been higher. And with the potential for rates to drop even further soon, this July could be a smart time to access your home equity. Not only are homeowners sitting on an average of $300,000 plus worth of equity now, the rates are still lower than popular alternatives and they could fall even further, perhaps before the end of 2024. Just be sure to go into the home equity borrowing process focused and with the ability to pay back what you owe as your home will serve as collateral in these circumstances and you could risk losing it if you can’t repay your debt.