CBS News
Why you should use a HELOC to pay for big expenses now
Home equity can provide homeowners the financing they need and, right now, there’s a lot of equity to utilize. With the average homeowner sitting on approximately $300,000 worth of equity today, many may want to use this unique form of financing to pay for big expenses now.
And there are a variety of ways in which they can do so.
From home equity loans to home equity lines of credit (HELOCs) to cash-out refinancing and reverse mortgages, there’s no shortage of ways for owners to access their equity. But while each of those will come with its own set of pros and cons, there’s a compelling case to be made for using a HELOC over the others now.
Functioning like a credit card, this home equity borrowing option can be used to pay for a variety of big expenses from weddings to college education to outstanding debt. And, if you’ve already decided that home equity is the best financing form for you, then it helps to know the timely benefits of using a HELOC now. Below, we’ll break down three of them.
Start by seeing what HELOC interest rate you’re eligible for here.
Why you should use a HELOC to pay for big expenses now
Not sure if a HELOC is the best way to finance major expenses now? Here are three compelling reasons why it may be:
Lower interest rates than alternatives
Credit card interest rates are in the low 20s right now while the average personal loan rate hovers around 12%. But HELOCs are still in the single digits, even in today’s elevated rate climate. The average HELOC rate is just 9.18% right now, multiple points lower than popular alternatives. And while that’s slightly higher than today’s average 8.59% home equity loan interest rate, the negligible difference between the two could soon prove to be a moot point in today’s evolving rate climate.
Learn more about your HELOC options online now.
The potential for those rates to fall further
Simply put: HELOC interest rates are variable. Home equity loan rates are not. While this is a major disadvantage in an economy in which rates are heading upward, it’s a distinct advantage now that interest rate cuts appear imminent. While credit card interest rates are also variable and subject to change, they’re more than double what HELOC rates are now, and the difference between the two will likely remain the same even as rates start to fall. But a HELOC, which is already cheap, could become cheaper as soon as September.
No need for refinancing
While a lower home equity loan interest rate could be tempting now, it may not be worth it, even with the slight savings. As mentioned above, rates on home equity loans are fixed and will require refinancing to secure a lower rate. HELOCs, however, will automatically adjust (typically once per month). Additionally, because a refinance won’t be required to secure a lower HELOC rate, borrowers will save on refinancing closing costs that they otherwise would have had to pay with the home equity loan counterpart. And in the face of multiple interest rate cuts ahead, it’s arguably better to use a HELOC instead of a home equity loan now.
The bottom line
If you have expenses worth thousands or tens of thousands of dollars, a HELOC could be the smart and effective way to pay for them now. HELOCs come with significantly lower interest rates than popular alternatives and, inherently, the ability for those rates to adjust further downward later this year and into 2025. And, unlike home equity loans, borrowers won’t need to pay to refinance to the better rate as the HELOC will just change automatically.
When considering the use of home equity, however, no matter the form, it’s critical to weigh the pros and cons of each borrowing type, as your home will serve as collateral in these circumstances and you could potentially lose it if you can’t afford to repay all that you’ve borrowed.
CBS News
Prosecutors present new evidence in trial of man accused of killing Laken Riley
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
CBS News
NYC priest who allowed Sabrina Carpenter to shoot a music video in church stripped of duties
NEW YORK – There’s more fallout for a Brooklyn pastor who allowed pop star Sabrina Carpenter to film a music video inside his church.
Monsignor Jamie Gigantiello has been stripped of his duties at the Annunciation of the Blessed Virgin Mary Church in Williamsburg.
Church officials said they were appalled he permitted Carpenter to film the provocative video last year for her hit song “Feather.”
The Diocese says an investigation revealed instances of mismanagement, including unauthorized financial transfers to a former aide in the Adams administration, which is now the subject of a corruption probe.
“Evidence of serious violations”
“I am saddened to share that investigations conducted by Alvarez & Marsal and Sullivan & Cromwell LLP have uncovered evidence of serious violations of Diocesan policies and protocols at Our Lady of Mount Carmel – Annunciation Parish,” Bishop Robert Brennan said. “In order to safeguard the public trust, and to protect church funds, I have appointed Bishop Witold Mroziewski as administrator of the Parish.”
Brennan, who oversees Catholic churches in the New York City boroughs of Brooklyn and Queens, said he also relieved a deacon who had been appointed as a temporary administrator during the investigation. He said the deacon had used racist and other offensive language during private conversations in the parish office that had been secretly recorded at Gigantiello’s direction.
Gigantiello didn’t respond to email and Facebook messages seeking comment Monday.
The controversial video
Released on Oct. 31, 2023, the “Feather” music video revolves around men behaving badly toward Carpenter before meeting grisly deaths.
At points in the video, the former Disney Channel star is seen pulling up to the distinctive brick church in a pink hearse and then dancing in front of the church’s ornate altar wearing a short black dress and a black veil alongside a colorful array of faux coffins.
In a letter to parishioners last November, Gigantiello said approving the filming was a “lapse in judgment” and maintained he wasn’t present at the time and didn’t realize how provocative the shoot would be.
On Monday, Brennan said a broader review uncovered other instances of administrative impropriety.
Among them is an ongoing investigation into Gigantiello’s use of a church credit card for “substantial” personal expenses, he said.
From 2019 to 2021, the monsignor also transferred $1.9 million in parish funds to bank accounts affiliated with Frank Carone, Adams’ former chief of staff, Brennan said.
The bishop said Gigantiello failed to seek prior approval for the transactions and didn’t properly document them, in violation of the diocese’s investment policies and protocols.
Carone’s law firm repaid $1 million of the funds, along with about 9% interest, according to Brennan. Gigantiello also requested early repayment for the remainder, but without the substantial interest called for under the loan notes, the bishop said.
Federal investigators have subpoenaed the Brooklyn church seeking information about Carone and Gigantiello’s financial dealings, though neither has been accused of any wrongdoing.
Brennan stressed the diocese is “fully committed” to cooperating with law enforcement in its investigations.
Meanwhile, the commotion set off by her music video hasn’t been lost on Carpenter.
She made light of it during a concert at Madison Square Garden in late September, just days after Adams became the first New York City mayor indicted while in office.
“Damn, what now?” she said cheekily to the Manhattan crowd. “Should we talk about how I got the mayor indicted?”
CBS News
G20 leaders call for end to conflicts in Middle East, Ukraine
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.