A home equity line of credit has attractive features for many homeowners.

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Home ownership offers several benefits to owners. Owners can build equity in their home and grow their initial investment, often exponentially. Making payments on time can often motivate owners Credit score and history, exposing them to better rates on other financial products in the future. And the interest they pay, especially after initially taking out a mortgage loan, can be used as a tax deduction each year.

Home ownership can also serve as a backup cash alternative when money is tight or when paying significant expenses. This is where a home equity line of credit (HELOC) comes into play. This type of credit allows you to access the existing equity in your home as cash versus taking out a new loan or another line of credit (which often carries a higher interest rate).

This revolving line of credit can be especially helpful in an economy suffering from persistent inflation and rising interest rates. If you think you might benefit from going this route, start exploring your options here now or use the table below to check eligibility.

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Why you should get a HELOC now

The reasons for taking out a HELOC vary based on the individual’s personal circumstances. However, there are some timely reasons to get a HELOC now. Here are three to know:

Can help fight inflation

when Inflation has cooled Many Americans are still paying more than they should in recent years, especially when it comes to Grocery shopping. Spending more money at the supermarket reduces the amount of residual income that can be used for other things such as debt repayments, home repairs or education costs. A home equity line of credit can help ease the pain caused by inflation. And because of the low interest rates available, it’s usually more affordable than a personal loan.

Not sure what you’ll qualify for – or what your interest rate will be? You can easily start exploring your HELOC options here or plug a few numbers into the table below to see how much you can get.

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Home values ​​are still high

“The national median single-family existing-home price rose 4.0% from a year ago to $378,700,” National Association of Realtors As noted earlier this month. “An estimated nine in 10 metro markets registered home price gains in the fourth quarter of 2022 despite mortgage rates rising 7%,” the association noted.

What does this mean for homeowners considering a HELOC? This means that even after the recent interest rate hike, their home value may still be the same as it was before the rate jump – or the home value may increase further. While this can make it difficult for potential home buyers to secure their first home, it gives current owners a unique opportunity to get as much as possible out of their existing home. A lack of home inventory will also help keep values ​​relatively stable.

If homeowners wait – and rates rise again – they risk the possibility that their home’s value will decline, leaving them with less borrowing power than they currently have. But if they act now they can secure a substantial HELOC at a reasonable rate.

Interest may be tax deductible

If you’re in the process of filing your 2022 taxes — or anxiously awaiting a refund — your mind is already on taxes. Fortunately, a HELOC can help in this category as well. You may be able to deduct the interest paid on a HELOC if you use the funds to fix up your home or residence. “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 Explains “the loan must be secured by the taxpayer’s principal home or second home (qualified residence) and meet other requirements.”

If you get a HELOC now, you won’t enjoy the tax benefit on your 2022 return. But if you save the paperwork and include it in your return next year, you may be able to deduct a significant amount of interest.

You can now easily explore your local HELOC options or use the table below

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Bottom line

If you’re a homeowner who needs extra cash but is concerned about the interest rates associated with credit cards or personal loans, consider going for a home equity line of credit instead. HELOCs allow you to tap into your existing home equity, and they typically come with competitive interest rates. This is a particularly beneficial option to pursue when inflation is still steady and home values ​​are relatively high. And the interest on a HELOC can be deducted from your next tax return.

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