3 Smart Ways to Use Your Home Equity This Summer

Summer begins on June 21, the end of the traditional school year and the start of vacations, trips to the beach and barbecues. This can be a great time for homeowners to complete delayed home projects, repair and reforms. Brighter (and longer) days make summer an optimal time to work on your home.

Fortunately, financing this type of project is not difficult. In fact, it’s easy to borrow from Home is equal You’ve submitted a via Home equity loan or Home Equity Line of Credit (HELOC).

These low-interest-rate options have several advantages over traditional borrowing options like credit cards and personal loans. That said, some uses for home equity are better than others. Below, we’ll break down three smart ways to use your home equity this summer. Start exploring your options here now to see how much you qualify to borrow

3 Smart Ways to Use Your Home Equity This Summer

Here are three smart ways to use a home equity loan now

Complete a home repair

Have you put off much-needed home repairs? Use the summer to complete the project and use your home equity to finance the cost. Homeowners are generally allowed to withdraw 80% to 85% Their accumulated home equity at the time of application. This means you could have thousands (if not hundreds of thousands) of dollars to play with.

But, arguably, the best reason to use your home equity is to complete a home repair Tax deductions. Specifically, if you use it for qualifying purposes, you can deduct the interest you paid on the loan when you file your 2023 taxes.

“Home equity loan interest and lines of credit are deductible only when the borrowed funds are used to purchase, construct, or substantially improve the taxpayer’s home that secures the loan.” The IRS. “The loan must be secured by the taxpayer’s principal home or second home (qualified residence) and meet other requirements.”

Explore your home equity loan and HELOC options here now to learn more

Consolidate your debt

Summer provides a time to reflect and relax. Accordingly, this may be a great time to review your personal financial situation. If you have debt — especially debt with high interest rates — it might be smart Consolidate it with a home equity loan.

Home equity loan interest rates Considerably lower than personal loans (which are often 10% or more) and credit cards (around 20%). If you have a clean credit history and Good credit score, you can get a home equity loan as low as 7% to 9% if you shop around. You can then use it to consolidate your existing debt so you can make one payment each month – and save the interest you’d otherwise be stuck paying if you kept your existing debts separate.

Renovate your rental property

Your repairs and renovations need not be limited to your main property. You may also be able to deduct the interest you pay on your loan if you use the funds to work on a rental property or “second home (or qualified residence).” So if you are currently a rental house – or plan to buy one and renovate it before renting – a home equity loan can help you get it in shape this summer.

“Generally, you can deduct home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 8a,” the IRS says. “However, any interest shown in Box 1 of Form 1098 from a home equity loan, or a line of credit or credit card loan secured by property, is not deductible if the proceeds are not used to purchase, construct, or substantially improve. Qualifying home .”

That said, if you’re planning to go this route, be sure to talk to your accountant or trusted financial advisor first to make sure your particular property qualifies. Learn more about your home equity options here.

Bottom line

A home equity loan or HELOC can be a smart financial product to use throughout the year. But if you’re planning to renovate your home (or second home) this summer and need cash to do so, this is an option worth pursuing, especially when compared to other, higher-interest options. This can help when you sit down to review your personal finances over the next few months, especially if you need a way to consolidate your debt into a more manageable size.