Why you should get a home equity loan for spring projects now
Home equity loans are used for a wide variety of financing purposes. One of the best ways to use them is for home improvement projects, repairs and renovations. Not only will these have the potential to boost your home's value (giving you more equity to utilize in the future) but, if used for IRS-eligible purposes, you may even qualify to deduct the interest paid on the loan when you file your tax return.
Still, the home equity borrowing process isn't always clear and simple. And for homeowners considering this unique funding source for upcoming spring projects, it can be beneficial to act now, in January. Below, we'll explain why.
Start by seeing how much home equity you could borrow here.
Why you should get a home equity loan for spring projects now
Here are three reasons why you should start the home equity loan application process now, a few months before your planned spring project gets underway:
You'll need to shop for rates and lenders
Not every home equity loan lender will offer the same rates and terms. Don't feel locked in with your current mortgage lender. Instead, shop around to compare rates and offers from at least three other lenders. Just be sure to get quotes for the same repayment periods and amounts to complete an accurate, side-by-side comparison. Then return to your original lender to see if they can match or beat the offers you've received to date. This will be an effective way to secure a great home equity loan rate, but it will take some time and effort to get exactly right.
Start shopping for home equity loan lenders online now.
It takes time for the funds to be disbursed
Once you've found a home equity loan lender you want to use — and you've gathered all of the necessary documentation that will be required — you can apply for the loan. But don't expect to have the funds disbursed rapidly. This can take weeks or even months. An appraisal will need to be scheduled and completed. You'll need to provide any additional follow-up documentation and, eventually, you'll need to close on the loan as you would a conventional mortgage. So, if you know you need the funds for March or April 2025, it could behoove you to get started now.
Economic factors could change
Home equity loan interest rates are relatively low now but they ticked up to start 2025 following a mostly steady decline for 2024. And while a rise in home equity loan rates isn't imminently anticipated, there's no guarantee that they'll remain as low as they are now, either. So if you can lock in a low rate, it may make sense to do so (you can always refinance in the future). Similarly, home values rise and fall, both of which can affect how much you can borrow. So you'll want to time your application appropriately to be able to get as much money as possible while also avoiding the underwater scenario in which you owe more than your home is worth. Understanding these dynamics, then, it could be advantageous to get started sooner than later.
The bottom line
Timing plays a key role in your financial health. For borrowers looking to their home equity to finance spring projects, then, it may be beneficial to get started now. This will allow for extra time to shop around for optimal rates and lenders and it will ensure that the funds are disbursed in time for the spring project timeline. Perhaps most importantly, it will also lock in one of today's low home equity loan interest rates ahead of any additional market volatility that could appear as the year evolves. Just be sure to limit any home equity loan amount to a level that you can comfortably afford to pay back to avoid risking your homeownership status in the exchange.
