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While mortgage interest rates and rates on other borrowing products have been uneven this year, one option has seen a slow but steady drop for all of 2024: home equity lines of credit (HELOCs). Interest rates on this product started the year in the double digits, coming in at 10.16% on January 3, according to historical data from Bankrate.Â
Since that point, they’ve steadily declined, the latest drop coming this week when HELOC rates fell to an average of 8.56% – the lowest point it’s been in all of 2024. That’s a difference of 1.6 percentage points in just over 11 months with the very real possibility that they could fall further soon.Â
With the knowledge of this potential and the understanding of the unique features of the product, many homeowners may want to take advantage by opening a HELOC now.Â
Start by seeing how low of a HELOC interest rate you could secure here.
Why you should open a HELOC now
A huge rate decline isn’t the only reason to open a HELOC, even if it is one of the most important. Here are three other reasons why you should consider opening a HELOC now:
The ability to take advantage of additional rate drops to come
HELOCs have variable interest rates that will change monthly for borrowers. This is a major risk in a climate with rates rising, but is now a major advantage, as can be seen with the HELOC rate trajectory of 2024. And because these rates are variable, borrowers won’t need to refinance like they would with a home equity loan, as HELOC rates adjust independently each month. Still, they can move upward as easily as they can fall, so it’s critical to monitor the rate climate should you pursue this specific home equity borrowing product.
Check your HELOC eligibility requirements online today.
You’ll save money compared to the alternatives
Have you seen the rates on other borrowing options right now? Personal loan interest rates are approaching 13% currently while credit card interest rates are averaging around 23% now – almost three times higher than HELOC interest rates. So start by determining how much money you need and then calculate the costs of borrowing with a HELOC versus personal loans and credit cards. You may be surprised at how much you can save simply by turning to your home equity right now.
You may qualify for a tax deduction (among other benefits)
If you use a HELOC for eligible home repairs and projects, you may qualify to deduct the interest paid on the line of credit when you file your tax return in the spring. So, not only is the interest paid on this product lower than other options, but you may very well get it back in the form of a deduction on your taxes. And you’ll only pay interest on the amount of the line of credit you actually used, not the full line you’ve been approved for. Plus, unlike credit cards, you’ll only need to make interest payments on the HELOC during the draw period, freeing up your budget for other expenses in the interim.
The bottom line
HELOC interest rates have been on a reliable trend downward all year, underlining the benefit of using this unique product right now. Due to the way the product is structured, borrowers will also be well positioned to exploit additional rate drops ahead and they’ll save money when compared to the other, more expensive credit options. Finally, by opening (and using) a HELOC in the final weeks of 2024, homeowners can potentially qualify for a tax deduction when they file their 2024 taxes. For all of these reasons, right now could be a great time to get started with a HELOC.