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HELOC interest rates are dropping. Here’s why you should open one now.
If you’ve been looking to borrow money in recent years, there have been few cost-effective ways to do so. Whether it was for a mortgage, a personal loan or simply via your credit card, rates have been higher than usual thanks to a combination of elevated inflation and a higher federal funds rate designed to tame it. But now that inflation has fallen significantly, interest rate cuts are back in play. And this has and will continue to affect borrowers, particularly those who use their homes to borrow equity.
While a home equity loan has generally been the smart way to do so in recent years, in today’s evolving rate climate, a home equity line of credit (HELOC) is becoming more favorable. And as HELOC rates drop, more homeowners should consider turning to this particular product to help make ends meet. Below, we’ll break down three reasons why you should consider opening a HELOC now.
Start by seeing what HELOC rate you’d be eligible for here.
Why you should open a HELOC as interest rates are dropping
The average HELOC interest rate was 9.26% earlier this week. Now it’s 8.94%. And it could drop much further and faster in the weeks and months to come. Here, then, are three major reasons why you should consider opening a HELOC right now:
A lower rate than the alternatives
While rates should start coming down across products, they’ll be dropping from different levels and at different paces. And when stacked up against popular alternatives like credit cards (with average rates close to a staggering 23% now) and personal loans (averaging close to 13% currently), HELOCs became the clear choice. Simply calculate the numbers over 10-year and 15-year repayment periods and match them against the alternatives to see how much you’d save in dollars and cents. The difference is substantial.
Start exploring your HELOC options online now.
The inherent potential for that rate to fall further
A fixed interest rate is preferential for borrowers when interest rates are climbing. However, a variable one is better when interest rates are falling. So, now that interest rates were cut earlier this month — and with the likelihood that they will be reduced again in November and December — a HELOC’s advantages truly stand out. That’s because a HELOC comes with a variable interest rate subject to change, and likely decline, monthly. So that 8.94% could drop again in October, November and December and borrowers won’t need to take any action for it to do so — it’ll adjust automatically.
Additional savings opportunities
Not only will home equity borrowers save with a HELOC when compared to the alternatives and by having the rate potentially drop each month, but they’ll also save by not having to pay for the expense of refinancing to get that lower rate. Home equity loans have fixed rates that will cost borrowers 1% to 5% of the total loan value if they want to refinance to a lower rate. However, borrowers can save those costs by opting for a HELOC instead. And with the potential for rates to fall numerous times soon, that could add up to significant savings that you otherwise may have had to pay with a home equity loan.
The bottom line
As rates fall and the economy adjusts, the benefits of some borrowing products will wane while others will increase. A HELOC falls in the latter category. Thanks to an already lower interest rate than some popular alternatives, the likelihood of that rate falling further in the near future and the savings opportunities presented by not having to refinance to secure a lower rate, a HELOC could make sense for homeowners in need of extra financing now. But remember that your home serves as collateral when borrowing it’s equity, so only apply for a line of credit that you know you can easily afford to repay.
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Head of Russia’s nuclear defense forces killed in Moscow blast triggered by device hidden in scooter, officials say
Moscow — The head of Russia’s Nuclear, Biological, and Chemical Defense Forces, Lt. General Igor Kirillov, was killed along with his deputy early Tuesday in an explosion in Moscow, Russia’s Investigative Committee said.
An explosive device hidden in an electronic scooter went off outside a residential building as the two men left the structure, Agence France-Presse cites investigators as saying.
“Investigators, forensic experts and operational services are working at the scene,” committee spokesperson Svetlana Petrenko said in a statement. “Investigative and search activities are being carried out to establish all the circumstances around this crime.”
The committee carries out responsible major investigations in Russia.
Kirillov was sentenced in absentia by a Ukrainian court on Dec. 16 for the use of banned chemical weapons in Ukraine during Russia’s military operation in Ukraine that started in Feb. 2022.
Ukraine’s Security Service, the SBU, said it had recorded more than 4,800 uses of chemical weapons on the battlefield since February 2022, particularly K-1 combat grenades.
During the almost 3-year operation, Russia has made small but steady territorial gains to the nearly one-fifth of Ukraine it already controls.
Kirillov had been in his post since 2017, AFP notes.
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Earthquake rocks Pacific island nation of Vanuatu, deaths feared, U.S. embassy damaged
A powerful earthquake hit the Pacific island nation of Vanuatu Tuesday, smashing buildings in the capital, Port Vila, including one housing the embassies of the U.S. and other nations. A witness told Agence France-Presse of bodies seen in the city.
Dan McGarry, a journalist with the Organized Crime and Corruption Reporting Project based in Vanuatu, told the Reuters news agency in an interview that police said at least one person had been killed and injured people had been taken to hospital.
“It was the most violent earthquake I’ve experienced in my 21 years living in Vanuatu and in the Pacific Islands. I’ve seen a lot of large earthquakes, never one like this,” he said.
The 7.3-magnitude quake struck at a depth of 35 miles, off the coast of Efate, Vanuatu’s main island, at 12:47 p.m. local time, according to the U.S. Geological Survey.
The ground floor of a building housing the U.S, French and other embassies had been crushed under higher floors, resident Michael Thompson told AFP by satellite phone after posting images of the destruction on social media.
“That no longer exists. It is just completely flat. The top three floors are still holding but they have dropped,” Thompson said.
“If there was anyone in there at the time, then they’re gone.”
Thompson said the ground floor housed the U.S. embassy, but that couldn’t be immediately confirmed.
A photo showed significant damage to the building:
The United States has closed the embassy until further notice, citing “considerable damage” to the mission, the U.S. embassy in Papua New Guinea said in a message on social media. “Our thoughts are with everyone affected by this earthquake,” the embassy said.
The New Zealand High Commission, housed in the same building, suffered “significant damage,” a statement from Foreign Minister Winston Peters’ office said, adding that, “New Zealand is deeply concerned about the significant earthquake in Vanuatu, and the damage it has caused.”
Thompson, who runs a zipline adventure business in Vanuatu, said, “There’s people in the buildings in town. There were bodies there when we walked past.”
A landslide on one road had covered a bus, he said, “so there’s obviously some deaths there.”
The quake also collapsed at least two bridges, and most mobile networks were cut off, Thompson said.
“They’re just cracking on with a rescue operation. The support we need from overseas is medical evacuation and skilled rescue, (the) kind(s) of people that can operate in earthquakes,” he said.
Video footage posted by Thompson and verified by AFP showed uniformed rescuers and emergency vehicles working on a building where an external roof had collapsed onto a number of parked cars and trucks.
The streets of the city were strewn with broken glass and other debris from damaged buildings, the footage showed.
Nibhay Nand, a Sydney-based pharmacist with businesses across the South Pacific, said he had spoken to staff in Port Vila who said most of the store there had been “destroyed” and that other buildings nearby had “collapsed.”
“We are waiting for everyone to get online to know how devastating and traumatic this will be,” Nand told AFP.
A tsunami warning was issued after the quake, with waves of up to three feet forecast for some areas of Vanuatu, but it was soon lifted by the Pacific Tsunami Warning Center.
Earthquakes are common in Vanuatu, a low-lying archipelago of 320,000 people that straddles the seismic Ring of Fire, an arc of intense tectonic activity that stretches through Southeast Asia and across the Pacific Basin.
Vanuatu is ranked as one of the countries most susceptible to natural disasters such as earthquakes, storm damage, flooding and tsunamis, according to the annual World Risk Report.
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12/16: CBS Evening News – CBS News
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