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The next inflation report is scheduled to be released on May 15 and millions of Americans will look to that data to better determine their financial future. If the rate dropped in April, it could be a sign that inflation is under control and interest rate cuts will be back under consideration. If it rose, however, or remained steady, the prognosis will be less positive.
For homeowners considering accessing their home equity, it may be crucial to pursue a home equity loan now, before the Bureau of Labor Statistics officially releases the report. As is the case with all financial services and products, the timing behind home equity borrowing is critical to get right. And with the new inflation report looming, there are multiple reasons to get a home equity loan now. Below, we’ll detail three reasons why owners should consider applying soon.
Start by seeing what home equity loan rate you could qualify for here.
3 reasons to get a home equity loan before the May inflation report
Here are three major reasons homeowners may want to apply for a home equity loan before May 15.
Rates could rise
Interest rates on borrowing products don’t just tick up after a formal increase in the federal funds rate. Lenders could also increase them based on economic conditions. And if next week’s inflation report is again a disappointing one, lenders could raise the rates they offer on home equity loans to get ahead of any potential official interest rate hikes to come. It makes sense, then, to apply for a home equity loan now before that possibility becomes a reality.
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Rates are locked
If you pursue a home equity loan before rates rise, you won’t regret it. That’s because home equity loan rates are locked until (and unless) you refinance them. So if rates rise later this month, post-inflation report, you’ll already be grandfathered in at today’s lower rates. This is a significant advantage when compared to the variable rate natures of other credit options and even home equity lines of credit (HELOCs), the latter of which will see homeowners paying varying rates until the amount they borrowed is paid in full.
You need help with other debt
The strong possibility that rates could rise next isn’t just bad news for prospective home equity borrowers, it’s problematic for those with other variable rate debts, too. That’s because a rise in the inflation rate could then result in yet another rise in rates on credit cards, personal loans and other credit types. And if you’re already stuck paying these now, relief may be pushed out even further. But by pursuing a home equity loan now, not only will you secure a better rate, but you could then use that equity to pay off your other, higher-interest debt before rates on those types tick up even higher.
The bottom line
With the next inflation report scheduled to be released on May 15, homeowners who need some extra financing may want to strongly consider applying for a home equity loan in advance. Rates could rise if they wait to act, but by acting now, they’ll lock in a lower rate than almost any other borrowing options. And that low-rate home equity loan could then be utilized to pay off other accumulated debts, which is particularly important to do as the prospect of interest rate hikes rises. As with all home equity loan considerations, however, it’s important to weigh the pros and cons of this unique option, as your home is collateral in these circumstances and you could risk losing it if you can’t pay back the amount you borrowed.