Interest rates have been falling across the board lately — on mortgage loans, on savings accounts, and, lucky for homeowners, on home equity products, too.
The latter have dipped quite a bit, actually. Over the last year, the rate on 10-year home equity loans has fallen from 8.55% to just over 8% today. While that doesn’t sound like much on paper, in reality, it can amount to significant savings for many borrowers, both monthly and in long-term interest. And if you shop around, it’s possible to find a home equity loan interest rate in the 7% range, assuming you’re a qualified borrower.
But despite their growing affordability, home equity loans aren’t always the right choice when you need cash. Heading into the spring, there are a few current scenarios in which experts say a home equity loan would be a smart move — and a few in which you should explore other options. Below, we’ll break down how to use (and not use) this unique borrowing tool in the upcoming season.
Start by seeing how much home equity you have to borrow here.
How to use a home equity loan this spring
Not sure if a home equity loan is the right borrowing tool for you this spring? Here’s when it may be:
If you’re paying off your credit cards
While rates on home equity loans have been falling, credit card rates have decreased at a much slower clip. On the average card, consumers are still paying nearly 21% — almost triple the current rates on home equity loans.
For this reason, home equity loans can often be a good tool for consolidating credit card debt.
How to use (and not use) a home equity loan this spring, according to experts
