Home prices just fell to an 11-year low. Here’s what you should do now.

Federal Reserve raised interest rate Again earlier this month, their tenth such increase since March 2022. The impact of the rate hike on the real estate market was, predictably, not encouraging.

Existing home sales fell 3.4% in April to a seasonally adjusted annual rate of 4.28 million. National Association of Realtors The announcement was made on Thursday. Overall, sales fell 23.2% from a year ago. House prices are also falling. They are 1.7% below the national average of $388,800, the association said. that They are the lowest in more than a decade or since 2012. In particular, prices rose in the Northeast and Midwest but fell in the West and South, NAR said.

In this environment, it makes sense for homeowners to use their existing ones Home is equal If they wait now – and prices continue to fall – they will have significantly less money to finance major expenses or home repairs and renovations.

Start by exploring your home equity options here to learn more.

Why You Should Use Your Home Equity Now

Your home equity is calculated by accounting for two factors: How much mortgage balance you have remaining (if any) and how much your home is worth/can be appraised in the current market.

For example, let’s say you had an initial mortgage balance of $400,000. You have since paid off that mortgage to $300,000. The value of your home increased by $500,000 while doing so. In this case, you would have $200,000 worth of equity. Since most lenders will cap the amount of equity you can borrow at 80% to 85%, you could theoretically withdraw $160,000 to $170,000 of your equity. You can probably get more if your home is worth more than $500,000 or if you owe less than $300,000 (or both).

However, half of your home equity calculation depends on the price of your home at the time of your application. If you live in an area of ​​the country where house prices are falling you may be able to get less now than you did 12 months ago. So it makes sense if you need money and don’t want to rely on high interest rate options like credit cards and personal loans. Now tap on your home equityIt is still relatively high though.

Check your home equity options here now

How to use your home equity now

There are multiple ways to use your home equity today. Here are the three best options.

Home equity loan

Home equity loan Allow yourself to borrow a lump sum from your home equity to use as you see fit. Home equity loan interest rates are fixed and usually much lower than what is available with a credit card or personal loan. In this situation your home is the collateral so make sure you can repay the loan when it comes due. Strongly consider using a home equity loan for home repairs and renovations because of the interest you may pay on it. duty free At the end of the year.

Learn more here.

Cash-out refinancing

A Cash-out refinancing Paying off your existing debt involves taking out a new mortgage loan. The new loan you take out will be for an amount higher than what you owe. You can then take the difference between the two as cash for yourself. Just make sure you compare advance rates. Mortgage and mortgage refinance rates are higher than they were a few years ago so you’ll want to crunch the numbers carefully before you act.

Learn more here.

HELOCs

HELOCs work Much the same way home equity loans do. HELOCs, however, don’t come as a single unit and instead act like a revolving line of credit like a credit card. HELOCs have variable interest ratesHowever, be careful. That said, you’ll likely pay less interest with this option because you’re only responsible for the interest on what you use, not applying for the full amount (unlike a home equity loan). HELOCs are also eligible for the same Tax deductions That’s not home equity loans.

Learn more here.

Bottom line

In today’s rate environment with home prices falling in many parts of the country, it may make sense to act quickly and use your existing home equity while there’s still enough. You can do this in a number of ways, from home equity loans to cash-out refinancing to home equity lines of credit. Do your research to discover the best option for your financial needs. Get started now!