Why Now Is the Right Time to Open a Home Equity Loan Before 2024 End

In today’s shifting financial landscape, exploring ways to fund home improvements or other expenses often leads homeowners to consider a home equity loan. This option has been a cost-effective way to borrow, especially as other credit types have seen rising rates due to inflation. While credit card and personal loan rates have surged, home equity loans and HELOCs (Home Equity Lines of Credit) have remained comparatively affordable due to the home serving as collateral. With the Federal Reserve’s recent rate cut in September—and another one anticipated soon—borrowing against your home has become even more attractive.

But there’s an additional benefit to opening a home equity loan before the year ends: potential tax savings. The IRS allows borrowers to deduct interest on home equity loans used for qualifying home improvements as long as the loan is secured by the home in question. This tax advantage can significantly affect your upcoming tax return, provided you use the funds before December 31, 2024.

Time is of the essence, as processing a home equity loan can take several weeks. By acting soon, you increase the likelihood of receiving your funds before the end of the year, allowing you to benefit from the tax deduction on any eligible home improvements completed before then. Waiting could mean missing out on these valuable savings, especially if your disbursement date slips into January. By securing your loan now, you’re setting up a financial advantage that could alleviate some of your 2024 tax burden while supporting your home projects.

Bottom Line

If you plan on taking on home projects and could use extra financial support, a home equity loan might be your ideal solution—especially before December 31. Whether you’re interested in a HELOC or a lump-sum home equity loan, now is the time to act to maximize tax benefits. Ready to explore options in Orange County? Let’s connect!

Reference: “Considering a home equity loan now? Why you should open one before the end of 2024” by Angelica Leicht. Published on November 6, 2024.