535 Third Street,
With interest rates on the rise, act now if you plan to refinance or tap equity in your home
The Federal Reserve has set the wheels in motion and for the first time in nearly a decade, interest rates are on an upward trajectory. The initial hike was a modest one quarter of one percentage point -- not a game changer for most investors or consumers. And from what Fed Chairwoman Janet Yellen telegraphed in her remarks following the mid-December, 2015, announcement, the Fed plans to move with caution and lift rates very slowly over the next few years.
That said, for homeowners contemplating refinancing their mortgages or tapping the value of their home via home equity borrowing, carpe diem may be the message to be heeded.
Positive Sales Trends - Data gathered during the first three quarters of 2015 found that single-family home and condominium sales reached their highest level in nine years. Further, those who sold their homes in the third quarter of 2015 also garnered the biggest price gains in eight years – an average of 17 percent over their purchase price.1 Rising home values and historically low interest rates have also stimulated refinancing activity. According to data reported by The New York Times, refinanced loans represented 42 percent of lenders' loan volume in September of 2015 – a 5 percent increase over August and the highest level reached since May.1
The same trend is in evidence as homeowners are tapping into the equity they have built up in their homes and using the cash for a range of purposes. Here are 10 good reasons to borrow, cited by banks and other types of consumer lenders.
Top 10 Reasons to Consider Tapping Home Equity
If you are thinking of tapping the equity in your home and need a refresher on what type of borrowing vehicle is right for you, consider the following at-a-glance comparison:
Home Equity Loans and Lines of Credit -- What's the Difference?
Home Equity Loan
Home Equity Line of Credit (HELOC)
Fixed interest rate for the life of the loan
Variable interest rate over the life of the loan
Repayment in regular installments over a specific period of time
Option to re-borrow as loan is paid, up to approved credit limit
Typically used for single large purchase, such as a car
Typically used to fund ongoing expenses, such as home renovations, borrowing only as needed
Entire amount of loan received upon approval
Checks can be written at any time, up to approved limit
Keep in mind that historically, home values have gone down as well as up, and a sustained decline could limit the financial options for those with significant loan balances. For more information or to obtain current rate data, contact your banking institution, credit union, or other consumer lender.
1Source: The New York Times, "Cashing in on Home Equity," November 13, 2015.
Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.
© 2016 Wealth Management Systems Inc. All rights reserved.