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6 years after California’s deadly Camp Fire, some residents are returning to Paradise
The town of Paradise, California, was almost completely destroyed in the 2018 Camp Fire — which scorched more than 150,000 acres and was the deadliest wildfire in the state’s history. The once lush landscape covered in pine trees was stripped bare, as 95% of the town burned.
But from the ashes, a new breed of American pioneer was born.
Kylie Wrobel and her daughter, Ellie, were one of the first families to return.
“Seeing the town grow and build, my heart needed this,” Kylie Wrobel said. “A lot of people don’t want to come back here. I had to stay here.”
In 2019, six months after the firestorm that destroyed everything, and nearly claimed their lives, the Wrobels were in tears. Now, Ellie Wrobel told CBS News, “Even though we lost everything in the fire, it’s nice to have something new.”
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Kylie Wrobel said, “You just heal every single day. It’s nice to get back in our hometown because then it, you get a fresh start on life.”
Thousands more have come back for a fresh start. In fact, Paradise was the fastest-growing town in California for the past four years, according to the California Department of Finance.
Jennifer Gray Thompson, the founder of the nonprofit After the Fire, which helps people decide if they should rebuild, said, “People who do decide to rebuild in a place like Paradise, they’re often even safer than they were before the fire, because that place has already been burned.”
Fire threatens 40% of homes in California. Starting in the 1990s, well-intentioned firefighters were trained to quickly put out flames to protect a growing population. But dead vegetation was left behind, which, combined with increasing drought levels, ended up creating a fuel source that continues to threaten communities today.
In Paradise, efforts are focused on protecting against future fires. All power lines will be buried underground and all residents must remove vegetation that’s too close to their homes. Federal grants are offered to homeowners who use fire-resistant materials to build their homes.
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Kylie Wrobel said she believes the town is more resilient today than it was in 2018.
“The likelihood of seeing another wildfire in Paradise, it already devastated our whole community, took the trees. I don’t think another wildfire would hit like it,” she said.
But not everyone agrees enough to return. While Paradise has seen record growth, the current population is still only one-third of what it was before the Camp Fire.
“Paradise is a microcosm of broader issues that our nation’s going to have to grapple with more,” said UC Davis’ Ryan Miller, a researcher who is tracking growing climate migration in the U.S. and the conflicts it’s causing.
“I’m hoping with some of the work we understand from Paradise, we can get ahead of some of those issues and prevent those disasters from happening later down the road,” he said.
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Borrowing from your home equity can be a wise way to improve your financial health, especially in today’s economy. For example, you can tap into home equity to fund home renovations that may improve your home’s value. Similarly, home equity loans and home equity lines of credit (HELOCs) typically offer lower rates than credit cards and other types of borrowing products, making them a useful option for consolidating debt and reducing interest costs. And with Americans sitting on an average of $319,000 in home equity currently, these loans may offer higher borrowing limits than other options.
Current economic factors, including inflation and interest rates, are also boding well for borrowers right now, making it an even better time to consider this type of borrowing. For starters, the Federal Reserve is confident enough in the downward inflation trend to cut the federal funds rate at the last three Fed meetings. While the Fed doesn’t set mortgage rates, the federal funds rate influences the interest rates lenders charge on their lending products. While not at pre-pandemic levels, interest rates on home equity loans and HELOCs are slowly improving. The average home equity loan interest rate is currently 8.41%, while the average HELOC interest rate is 8.52% (as of December 19, 2024).
Still, the only economic constant is change. Inflation increased slightly in October, and other factors could alter the borrowing environment going forward. With that in mind, choosing between a HELOC and home equity loan will depend on your financial goals and how these products respond to changes in the market. Let’s explore which of these two home equity options might make sense for your situation.
Start comparing your home equity borrowing options online now.
Why a HELOC could be better than a home equity loan in 2025
HELOCs work like credit cards, offering a line of credit that can be borrowed from multiple times (up to the credit limit). This type of home equity borrowing can be a useful option if you want to use funds as needed over time, as opposed to getting one large lump-sum payment like a home equity loan. For example, if you’re renovating your home with multiple projects, a HELOC lets you access funds as needed for each phase, helping you avoid borrowing more than necessary upfront.
Just remember, HELOC repayment terms usually start with interest-only payments for a set number of years, typically five or 10 years.
“This is for someone who wants a low starting monthly payment, but keep in mind you may not be paying off all the principal,” says Adam Spigelman, senior vice president at Planet Home Lending. “If you borrow $50,000 and you make interest-only payments for five years, at the end of five years, you’ll still owe $50,000.”
Also keep in mind that HELOCs have variable rates that are tied to an index such as the prime rate, which is typically around 3% higher than the federal funds rate. So if you anticipate the Fed’s rate-cutting trend will continue, a HELOC might save you money in the short term. On the other hand, you might think twice about getting a HELOC if you believe rates will increase during your repayment term.
“When that index rate rises, your monthly payment may also rise. That higher payment can leave you with less money in your pocket, which can make it harder to stay out of debt. If the higher interest rate comes at a time when you’re starting to do the principal repayment, it can lead to payment shock,” Spigelman notes.
Find out how affordable the right home equity borrowing option could be today.
Why a home equity loan could be better than a HELOC in 2025
If you’re looking for more predictable financing, you may prefer a home equity loan for its fixed interest rate and monthly payment that remains the same during the life of the loan, regardless of rate adjustments.
“A home equity loan is a fixed rate and doesn’t fluctuate based on what the Federal Reserve does,” says Jeremy Schachter, branch manager at Fairway Independent Mortgage Corp. “So when the rates come down, your fixed rate doesn’t go down.”
While the Fed’s ongoing rate cuts might reduce borrowing costs on HELOCs in 2025, a home equity loan might be a better long-term option if you expect rates to rise during your loan term.
Home equity loans are a great option if you need a large, lump-sum payment to fund a large expense. You might use one to fund a major home renovation, consolidate high-interest debt or even cover your child’s college tuition. Since home equity loans often have lower rates than private student loans, they may help you save money in the long run.
Should you borrow from your home equity now or wait?
Deciding whether to borrow now or wait until 2025 or later depends on your financial situation, goals and borrowing preferences. As Schachter explains, the type of loan you choose matters, as fixed-rate and variable-rate options affect how your monthly payments change over time.
“Depending on your needs and goals with the funds for the loan, it may make sense not to wait to take out a HELOC because it does change with rates changing. If you are looking for a home equity loan, it may make sense to hold off until next year if your projects or use of the funds can be pushed out,” says Schachter.
The bottom line
Heading into 2025, the choice between a home equity loan and a HELOC comes down to how stable you want your payments to be, and which direction you anticipate interest rates are trending. So, take time to weigh the pros and cons of each option and how they might impact your budget. Finally, remember that home equity loans and credit lines are secured by your home, so you should never borrow more than you need, and make sure the payments fit comfortably into your budget before signing for one.