How to Leverage Your Home’s Equity for Spring Improvements

Spring is in the air, which for many homeowners means a busy season ahead to refresh their curb appeal or complete renovations.

While spring is typically homebuying season for many consumers, for those already in a house or location they like, leveraging your home’s existing equity can be a way to make desired improvements. With home values having increased dramatically in the past few years, now could be an ideal time to tap into the equity you’ve built in your home.

Here are a few ways to utilize your home equity for your goals.

Home Equity Lines of Credit

This year could be a great time for homeowners to leverage their home’s equity for a variety of reasons like windows, siding, kitchen or bath updates, or installing a pool.

Housing inventory remains tight in many markets, and for those who may be looking to move but have had difficulty finding the right house, utilizing the equity they’ve already built through a home equity line of credit (HELOC) can be a good way to get the features they desire in a house without the need for a move.

A HELOC is a revolving credit line, like a credit card but typically offering a lower interest rate, and can be a great option for home renovations, building your backyard oasis and more. You can withdraw money as needed for up to 10 years (with 20 years to repay the loan) and only pay interest on the money you borrow, providing flexibility for projects that may have multiple stages or varying costs.

HELOCs can also be a great option for debt consolidation and even to pay off outstanding balances on high-interest credit cards, enabling you to do a financial spring cleaning as well. While interest rates are elevated, depending on the rates you’re paying on your other current debts, you could consolidate using a HELOC to help make a dent in the principle while also lowering your overall payments.

Locking in Your Rate

A HELOC has a variable interest rate, so your monthly payments may fluctuate, which is something to keep a close eye on, particularly during periods of elevated interest rates.

One additional optional feature to consider with most HELOCs that can be beneficial is the ability to lock in a fixed rate, depending on your lender. If the variable rate you’re currently paying is higher than the fixed rate offered, locking in your rate can enable you to make consistent payments each month, and you’ll be making interest and principal payments, which can help you save money over the term.

Terms and conditions for locking your rate will vary by lender, so it is important to work closely with your banker to understand when you can lock your rate and how often, any fees you will incur, as well as any minimums or maximums for rate locking.

Each consumer’s financial journey is unique, so there is no one-size-fits-all solution when it comes to loans and credit. If you’re unsure which options are best for your needs, speaking with your local banker can be a great way to help identify which products will work best for your situation and put a roadmap in place to reach your goals.