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3 timely HELOC myths homeowners should know now
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When it comes to borrowing from your home equity, you have a variety of options to choose from.
From reverse mortgages for seniors to cash-out refinancing to home equity loans, there are multiple ways to tap into your equity now. But only one — home equity lines of credit (HELOCs) — allows you to take advantage of a cooling rate climate. That’s because rates on these products are variable and positioned to change monthly depending on what’s occurring in the broader economy. And with multiple rate cuts issued this year and another likely for the Federal Reserve’s final 2024 meeting, many borrowers may understandably be turning to this option now.
Still, there are some important caveats to keep in mind right now, especially when borrowing from a critical asset like your home. This extends to knowing the truth about some misleading concepts. Below, we’ll break down three timely HELOC myths homeowners considering should be aware of now.
Start by seeing what HELOC interest rate you’d qualify for here.
3 timely HELOC myths homeowners should know now
Not sure if now is the right time to secure a HELOC? These common but timely myths can help answer that question:
The rate will continue to fall
This isn’t a total myth but it’s not completely factual either. No one knows for sure if HELOC interest rates will continue to decline — as they’ve done all year — or if they’ll be static or even rise. Inflation, after all, just rose in October. Additional increases there will almost assuredly cause interest rates to tick up again.
But even if the rate does continue to fall, it doesn’t mean that borrowers should delay acting. HELOC rates adjust independently each month. So if rates fall in December or January, for example, borrowers will automatically be positioned to take advantage. If they rise, though, it could become expensive. It’s worth weighing these scenarios then, with the understanding that rates may or may not continue to fall.
Explore your current HELOC options online today.
Home values will continue to rise
The average amount of home equity is high right now — just under $330,000. And home prices are continuing to rise in many parts of the country, meaning that you may have more home equity to work with in the future if you delay acting. But the key word there is “may.”
While not precisely a myth, it’s misleading to assume that home values will continue to rise. And even if they do, they’re unlikely to grow so dramatically that it will have been worth applying for the financing you already need. Any number of factors could cause home values to drop. So account for this real possibility to best determine your next course of action.
Applying now will secure a tax deduction
Interest paid on HELOCs is tax-deductible if used for qualifying home repairs and projects. But applying now, in the waning weeks of 2024, is only the first step. If you want to deduct the interest you paid on the line of credit when you file your return in the spring, then you will need to apply — and use the HELOC — sometime between now and January 1, 2025. If you don’t and decide to use it for qualifying purposes in 2025, you’ll still you’ll need to wait until you file your next return in 2026 to benefit. Time your usage, then, accordingly.
The bottom line
The right time to open a HELOC could be now for many homeowners. Others, however, may benefit by waiting. By understanding the above myths, each type of borrower can better determine when to act. It’s critical, however, to weigh all home equity borrowing options carefully as your home serves as collateral when you borrow from it, inherently risking your homeownership if you fail to repay all that you’ve withdrawn.
Learn more about your current HELOC options here.
With President-elect Donald Trump vowing to pull the plug on the $7,500 tax credit for buyers of electric vehicles, one EV maker and its billionaire owner are fully behind the idea and even stand to profit from it.
“Take away the subsidies, it will only help Tesla,” Tesla owner Elon Musk posted in July on X, the social media platform he owns.
The credit granted to buyers of EVs helped make the case for buying the climate-friendlier vehicles, and when an earlier version of the tax credit was done away with several years ago, Tesla cut prices on its cars by about half of the credit its buyers were no longer receiving.
Tesla is the sole automaker to be generating a profit on its U.S. sales. Manufacturing EVs is a losing proposition for Big Three vehicle makers like Ford and General Motors, who sell a fraction of EVs compared with Tesla.
Once the EV tax credit is vanquished, the price of EVs overall might drop, cutting into Tesla’s profits, as opposed to increasing the company’s red ink as it could for legacy automakers still working to get a firmer footing in the EV market. Should traditional automakers scale back on their EV production and sales to curtail the losses, EV shoppers would have even fewer options, benefiting Tesla.
As Musk touted his support for axing the EV tax credit, Tesla’s auto industry rivals signaled the opposite.
The Alliance for Automotive Innovation urged that the tax credit continue, telling lawmakers in an October letter that U.S. manufacturers count on it as they vie with Chinese EV production. Around the world, vehicle makers have poured billions into transitioning to electric cars.
Further, the Zero Emission Transportation Association on Friday called on Trump to reconsider, saying the tax credit has bolstered employment in states that voted Republican, including Ohio, Kentucky, Michigan and Georgia.
“If the United States is going to continue to fight to bring those jobs here and actually compete to win against China, there needs to be a demand signal — like the New Clean Vehicle Tax Credit — aligned with that goal, otherwise we would be undercutting those investments and hurting American job growth,” ZETA Executive Director Albert Gore stated on Friday.
“The potential elimination of the federal tax credit for electric vehicles by the Trump administration — without another form of incentive to replace it — could derail the trajectory of EV sales in the United States,” offered Edmunds analysts.
Trump repeatedly vowed to eliminate what he labeled President Joe Biden’s “EV mandate” as he campaigned for the White House.
While there is no such mandate in federal law, the Inflation Reduction Act passed during President Biden’s term revived the credit for many EV purchases, while also granting low interest loans to manufacturers constructing EV and battery plants.
Trump’s transition team intends to knock out the credit as part of a broader tax-reform measure, according to a Thursday report by Reuters, which cited two sources with direct knowledge of the matter.
The president-elect during his first term attempted to repeal the EV tax credit, which was expanded by President Biden in 2022.
Analysts who track Tesla concurred with Musk’s view that the credit’s demise would only help his company.
“This is a clear negative for the EV industry at first look and would particularly hurt GM, Ford, Stellantis and Rivian,” wrote Wedbush Securities tech analyst Daniel Ives. Conversely, “this will enable Tesla to further fend off competition from Detroit as pricing/scale/scope is an apples-to-oranges when compared to the rest of the auto industry once the EV tax credit disappears.”
Americans looking to buy an electric car should do so sooner rather than later, advised Ivan Drury, Edmunds’ director Insights.
“The federal tax credit combined with slashed prices due to slowed sales momentum has contributed to electric vehicles becoming labeled as some of the best deals on the market in 2024. Now, with production cuts shrinking supply and a fresh wave of demand from those seeking a deal while they still can, it can be all but assured that the price for that EV you’ve been eyeing is going up in the coming months,” Drury stated.
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Democratic senators ask Pentagon and DOJ to investigate any Elon Musk contact with Putin and other top Russians
Two top Democratic senators are asking the Pentagon and the Justice Department to investigate billionaire Trump ally Elon Musk’s reported contacts with Russian President Vladimir Putin and other top Russian officials in recent years.
Sen. Jack Reed, chairman of the Senate Armed Services Committee, and Sen. Jeanne Shaheen, a top member of the Senate Armed Services and Foreign Relations Committees, wrote a letter to Defense Department Inspector General Robert Storch and Attorney General Merrick Garland Friday, urging them to determine whether Musk’s reported contacts with the Russians should force a review of the federal government’s contracts with his company, SpaceX. Reuters was first to report the request.
The Wall Street Journal reported in October that Musk has been in regular contact with Putin since late 2022, and that Putin asked Musk to activate his Starlink satellite internet program over Taiwan for Chinese President Xi Jinping. SpaceX did not immediately respond to a request for comment.
Shaheen and Reed expressed concern that giving a security clearance to someone with a reported history of Russian communications could pose a national security risk.
“These relationships between a well-known U.S. adversary and Mr. Musk, a beneficiary of billions of dollars in U.S. government funding, pose serious questions regarding Mr. Musk’s reliability as a government contractor and a clearance holder,” the senators wrote.
The world’s richest man has become a close ally of President-elect Donald Trump in recent months, giving over $130 million to help elect him, campaigning and traveling with him, and weighing in on Cabinet picks. Trump announced earlier this week that he’s tapping Musk and businessman Vivek Ramaswamy to lead a new Department of Government Efficiency.
CBS News also reported Friday that Musk recently met with Iran’s ambassador to the U.N., Amir Saeid Iravani, at the ambassador’s residence in New York, according to two sources familiar with the meeting. The U.S. does not have diplomatic relations with Iran.
The senators also sent a separate letter to Air Force Secretary Frank Kendall, expressing their concern that the Space Force’s reliance on SpaceX could also affect national security.
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