Boost Your Home Equity: 3 Moves to Make in June

The beginning of a new month is a great time to review your financial situation. And with inflation remaining stubborn (but declining significantly) and interest rates still at high levels, this June is a critical time to evaluate what is working and what is not, and take steps to improve the latter. With interest rates on

rising significantly (average rates on both are now in the double digits), many homeowners may choose to tap into their home equity instead.

Home equity loans and home equity lines of credit (HELOCs) are now available to qualified borrowers with interest rates below 10%. However, like any financing option, they need to be used strategically to get the most benefit. And the timing has to be right to achieve certain financial goals. To that end, homeowners looking to tap into their home equity this June should take some smart steps. Here are three of them:

3 Smart Home Equity Loans Available in June

Home equity loans and HELOCs offer special benefits to homeowners in today’s unique economic climate. Here’s how to take advantage of these offers in June:

Start Searching for a Lender

When it comes to loan products, it benefits borrowers to shop around for the lowest interest rates and best terms. This also applies to home equity loans. But this is especially important in June. With the next inflation report and the Fed’s rate cut announcement both due to be released on June 12, the interest rate landscape could shift in either direction mid-month.

So it’s important to research lenders in advance so you know where to go if interest rates change in the coming weeks. Consider getting prices from at least three different lenders now to see which one has the best deal and which one looks the most favorable.

Locking in your mortgage rate

With inflation cooling significantly but still more than a percentage point above the Federal Reserve’s 2% target, there’s plenty of reason to lock in your mortgage rate now. This way, borrowers can protect themselves against the possibility of higher interest rates in the future.

“Given the current economic landscape and the potential for interest rates to rise, locking in today’s home equity loan rates can be a wise decision,” founder of Integrity Wealth Management, recently told.

And remember, a rate cut probably won’t come until some point in 2024, and likely won’t be significant, instead reinforcing the benefits of locking in your mortgage rate this June.

Take advantage of home repairs and renovations

June and summer are popular times for home repairs and renovations. Some of these summer renovations can significantly increase the value of your home as well as your equity. You can pay for these projects in a variety of ways, but taking out a home equity loan is one of the better options.

That’s because the interest you pay on a home equity loan or HELOC is tax deductible when used for a qualified home project approved by the IRS. So, compared to the interest you would have to pay on a personal loan or credit card, it’s clear that taking out a home equity loan is the best option for home repairs and renovations this June and beyond.

Bottom Line

If you’re looking to tap into your home equity, this June could be a good time. But to take advantage of this unique type of loan this month, homeowners should research lenders carefully, lock in an interest rate early, and use the money for summer repairs and renovations. That way, they’ll pay less interest, which will then be deducted from their taxes next spring. Because your home acts as collateral in such a scenario, and you could lose your home if you don’t repay the money you borrow, make sure you fully understand the pros and cons of taking out a home equity loan.