Timing is everything, especially when it comes to borrowing money. As borrowers are well aware, recent years haven’t been ideal for those who needed extra financing. Mortgage interest rates surged to their highest level in decades and have only come down slightly since. Credit card interest rates, meantime, just broke a new record, moving past 23%. Even personal loan rates are closing in on 13% for qualified borrowers, and higher for those with bad credit. 

Home equity borrowing, whether via a home equity loan or home equity line of credit (HELOC), however, has been significantly more cost-effective than these alternatives. Still, they’re not immune from wider trends, making the timing surrounding an application critical to get right. And with just weeks left in 2024, prospective home equity borrowers should consider making some timely moves right now. Below, we’ll break down three of them. 

Start by seeing how low of a home equity loan rate you could qualify for here.

3 home equity moves to make before 2025

With little time to spare before the end of the year, homeowners who are considering accessing their home equity should consider making these moves now:

Choose a home equity loan over a HELOC

Inflation just rose slightly in October and while it’s too soon to tell if that’s part of a broader trend or a signal of additional issues to come, it’s not what borrowers need. Higher inflation, after all, led to higher interest rates on a variety of borrowing products, including home equity loans. And if rates are hiked again, rates on these products will inevitably follow. 

It’s beneficial, then, to choose a home equity loan over a HELOC in these circumstances. The former has a fixed interest rate that won’t change over the life of the loan while the latter has a variable one that will change each month. And with inflation rising and the potential for interest rates to stay static (or even rise), a fixed rate is safer. Plus, the average 8.41% home equity loan rate is lower than the 8.61% accompanying HELOCs now, anyway.

Get started with a home equity loan online today.

Shop around for lenders

Did you know that you don’t need to use your current mortgage lender to tap into your home equity? With this flexibility, then, and with the average amount of home equity high right now, it makes sense to shop around for lenders as soon as possible. It may take weeks or even months to have your funds disbursed. So by shopping around now for the best rates and terms, you can potentially get approved before the end of the year, allowing you to use the funds as needed within weeks. And this will position you for other benefits, too. 

Apply now (if using for home projects)

If you know you’re planning to use your home equity loan for a home project, then it behooves you to apply now (assuming your creditworthiness is applicable). Here’s why: Interest paid on both home equity loans and HELOCs is tax-deductible if used for eligible home repairs and improvements. But if you wait to apply much longer and get approved in 2025 or simply use the money in that year, you’ll delay a critical tax deduction until you can file your next return in 2026. This is arguably one of the most important home equity moves to make in the final weeks of the year, assuming this is the intended purpose of the financing.

Learn more about your potential home equity loan tax benefits here.

The bottom line

The time is still right for many homeowners to access their home equity. To improve their chances of financial success, however, they should strongly consider making the above moves now, before January 1, 2025. By opening a home equity loan over a HELOC, shopping around for the best rates and terms and opening the loan now to take advantage of potential tax benefits in 2024, borrowers will better position themselves for success both in the short-term, in 2025 and in the years that follow.