Home equity ‘future-proof’, experts say: When to take advantage of it | Real Time Headlines

The homeowners sit $17 trillion in equity As of the end of the first quarter of 2024, according to CoreLogic. average homeowner Received $28,000 Compared with the same period last year.

For many people, there is no need to touch the money.

Bankrate financial analyst Greg McBride said home equity “isn’t like bread.” “It won’t go bad if it just sits there.”

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One exception: If you need to major in Home decoration Tapping into your home equity or making repairs could be a viable solution, experts say.

55% of homeowners surveyed believe home improvements or repairs are a good reason to tap into home equity, according to A new survey from Bankrate. The website surveyed 2,294 U.S. adults, including 1,133 homeowners, in late June.

Using home equity “is certainly a cheaper borrowing option than resorting to a personal loan or credit card,” McBride said.

As of August 7, the current average interest rate on home equity loans is 8.59%. according to to bank interest rates. The average HELOC interest rate is 9.37%.

For comparison, average personal loan interest rates Bankrate found the interest rate to be 12.38%. The average interest rate for credit cards is 24.92%. according to Go to the loan tree.

While saving cash remains the most common way homeowners finance renovation projects (83%), credit card use has increased, according to Participate in the 2024 US Houzz & Home Study. Houzz surveyed 33,830 homeowners ages 18 and older from January 19 to February 27.

About 37% of homeowners use credit cards to pay for repairs, up from 28% in 2022. Huzi established.

although Digging for Equity Although cheap, there are still risks. With interest rates even higher as the Federal Reserve continues to raise interest rates, you need to have a plan to pay down your debt.

Jessica Lautz, deputy chief economist for the National Association of Realtors, said it makes sense to use your home equity to invest in your home. Projects like this not only help protect homes; they can even enhance its valueincreasing your profit when you eventually sell.

The highest cost recovery rate for exterior projects is for new roofs, which is 100%. according to NAR’s latest renovation impact report. NAR found that for interior projects, the highest percentages of recovered costs were for hardwood floor refinishing (147 percent) and new wood flooring installation (118 percent).

“We find that hardwood flooring has more universal appeal,” Lautz said. “For something like a roof, it’s a big project … people may want to have it done before moving into their home to make sure the roof is in good working order.”

more than one tenth Millennials homeowner Say taking a vacation or buying a big-ticket item are good reasons to tap into your home equity, according to to bank interest rates. But experts said the move was “inappropriate”.

“You can’t afford a vacation if you have to pay for it,” McBride said.

Additionally, he explains that big-ticket items like cars or electronics depreciate in value from the date of purchase.

“Not only are you buying an asset that is depreciating, but you are financing the purchase of that depreciating asset,” McBride added.