Home equity is going away. Here’s what to do now.

Homeowners have enjoyed significant increases in their home values ​​for nearly a decade — but today’s market may soon make up Increase in house prices Less common.

In fact, a recent report from corelogic It found that the average US home borrower saw their home equity decline by $5,400 year-over-year in the first quarter of 2023. This is the first annual home equity loss since early 2012, according to the report.

If you are a home owner, your Home is equal One of the best resources you can have is to access cash when you may need it. Even if home prices show signs of falling, you may still be sitting on a large amount of equity today. That said, there are steps you can take now to take advantage When your home equity is still high.

Thinking of tapping into home equity today? Compare the best home equity rates you can qualify for right now here.

What is going on with home equity?

Home equity may drop slightly in the first quarter of the year, but you may still be sitting on a lot of potential home value.

“Home values ​​generally keep pace with inflation, with few exceptions,” says Shawn Ballinger, CFP, founder of Columbus Street Financial Planning. “With strong demand and tight supply of single-family homes in the U.S., prices should remain strong, but some weakness is needed following the pandemic’s pull-forward supply pressures.”

In fact, the same CoreLogic report says that the average equity is still significantly higher since the start of the pandemic and house price Still expecting overall appreciation this year.

“Home equity trends closely follow changes in home prices,” Selma Hepp, CoreLogic chief economist, said in the report. “As a result, while the average amount of equity declined from a year ago, it increased from the fourth quarter of 2022, as monthly home price growth accelerated into early 2023.”

That means, despite something overall Drop in home equityYou can still be in a prime position when it comes to home value appreciation.

Tap into your home equity now and secure the best rates available today!

How to use your home equity now

There are a few different ways you can do this Access your home equity Today. This type of loan can help you with renovation projects or other financing home improvement To keep the value of your home high even if the price drops. Here are three to consider:

Home equity loan

A Home equity loan Sometimes called a Second mortgage. These loans are secured by your home and are based on the amount of equity you’ve built up in the home or the value of your current home minus the amount you still owe on your mortgage.

Generally, home equity lenders will allow you to borrow Up to 80%-85% of your home equity. Home equity loans usually carry fixed rates — which Today APR can be as low as 7%-8% – and you repay your loan in fixed monthly payments over five to 30 years.

HELOC

Home Equity Lines of Credit (HELOCs) Home equity loans are similar in that they are based on the equity you have built up in your home. But when you borrow using a HELOC, you only pay interest on the amount you use, not the entire line of credit you’re approved for. HELOCs also carry variable interest rates, which can Changes during the lifetime of the account. If you expect interest rates to drop in the future, a variable rate can help you save in the long run.

It’s also important to note that both home equity loans and HELOCs can have tax benefits depending on how you use them. This is the interest you pay on them duty freeAs long as they are used for qualified home renovations, accordingly The IRS.

Explore today’s top home equity rates and see what you may qualify for right here.

Cash-out refinancing

Unlike the previous two options, a Cash-out refinancing No need to take additional loans. Instead, it requires refinancing your current home loan. By doing this, you can get a bigger loan and take the difference between the loan amount and what you still owe in cash.

Cash-out refinancing May be an especially good option if your current mortgage rate is high. You can score a lower rate by refinancing in this case. However, if you already have a very low mortgage rate, you could end up paying much more over time if you refinance to a higher rate today.

Explore your refinancing options here to see if it’s right for you

Bottom line

In today’s market, home values ​​can quickly drop — especially for people Some areas of the country. But after nearly a decade of rising home values, you can still access a large amount of equity in your home. Consider using a home equity loan, HELOC or cash-out refinance today. To take advantage of that equity When you can — and score great rates compared to alternatives in today’s high rate environment.

Start here now.