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between Stubborn inflation And Stock market uncertaintyMany Americans may find themselves looking for any help they can get.
While many credit options are available to help make ends meet, homeowners should consider giving their homes a boost. Find out a Home equity loan or a Home Equity Line of Credit (HELOC) Homeowners can use the equity they have built up in their home for emergencies, home repairs or other major expenses. This type of credit usually comes with a favorable interest rate and can provide a valuable tax break if used for IRS-approved reasons.
To get the most out of a HELOC, however, it helps to first know what a good interest rate is As with most credits, the lower the interest rate the better the product or service for your needs. Fortunately, HELOCs are one of the lowest interest rate options available today.
If you think you might benefit from taking out a HELOC, start exploring your options here or use the table below to check your eligibility.
What is a good HELOC interest rate?
As with credit card and personal loan interest rates, the lower the interest rate, generally the better. To determine what a “good” rate is, compare what HELOCs are currently offering to what you can get with either of the other two credit options.
The average interest rate for a credit card is currently around 20%. For personal loans, it’s been around 11%, according to the Federal Reserve. A HELOC, meanwhile, is around 7%.
Just understand that HELOCs come with both fixed and variable interest rates. This can be favorable if you lock in a low interest rate, but if you get a variable rate, it can go up or down based on external factors. Do your homework and crunch the numbers to make sure either option works for you. And remember: the best terms and rates are usually reserved for applicants with the highest Credit score and reliable credit history. So make sure to get your credit in top shape before applying.
You can now easily determine your HELOC interest rate.
HELOC benefits to know
Lower interest rates aren’t the only benefit HELOCs offer. Here are two other key benefits that people considering HELOCs should know:
Interest may be tax-deductible: Arguably the greatest application of a HELOC is Tax deductions You may receive if used for permitted reasons. “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 online. “The loan must be secured by the taxpayer’s principal home or second home (qualified residence) and meet other requirements.”You only pay interest on what you use: With some types of credit, you’ll be stuck paying interest on the full amount you’re approved for, no matter how much you use. With a HELOC you only pay interest on the amount you use. So, if you apply for a line of credit for $50,000 but only use $25,000 of that amount, you’ll only pay interest on the later amount.
Explore your HELOC options now and get started!
Other information
Have more questions about HELOCs? Not sure if it’s right for you? Learn more about this unique credit option by checking out the articles below.
MoneyWatch: Managing Your Money
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