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CBS News
02-06-2025
- Business
- CBS News
Home equity borrowing advice that owners should know now, according to lenders
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Before you tap into your home equity, make sure you know what experts say about navigating this type of borrowing now. Getty Images Finding affordable ways to borrow money has become increasingly challenging. Popular avenues such as credit cards and personal loans carry steep interest rates right now, straining household budgets in today's high-rate environment. However, home equity loans and home equity lines of credit (HELOCs) stand out as cost-effective alternatives for consolidating debt, funding renovations or covering major expenses. Since they use your home as collateral, they can give access to funds at lower interest rates. With the average American homeowner sitting on around $313,000 in equity, these products unlock a valuable financial resource when used strategically. Below, lending experts share their top advice for homeowners thinking about borrowing equity right now. Find out how affordable home equity borrowing could be now. Home equity borrowing advice that owners should know now Here's the home equity borrowing advice lenders say can help you save money now: Lock in promotional rates for short-term needs Some lenders are currently offering HELOC rates as low as 5.99% for the first six months, lenders say. Steven Glick, director of mortgage sales at real estate investment fintech company HomeAbroad, says these deals work especially well if you're considering home upgrades that add immediate value to your property. He recommends matching your timeline to the promotional period. If you're planning a kitchen upgrade or bathroom renovation that you can complete within half a year, these starter HELOC rates can provide substantial savings. But don't let a flashy rate fool you, Joe Perveiler, senior vice president and home lending executive at PNC Bank, emphasizes. "Compare multiple lenders and review the full offer, not just the rate and terms," Perveiler says. "Sometimes, a low rate can end up costing more if it has higher closing costs and other fees." Strive to find the best overall deal rather than the lowest introductory rate. Learn more about the home equity options available to you today. Shop for low or no-fee deals Competition among lenders is creating wins for borrowers who take the time to shop around. Banks are waiving HELOC closing costs and offering rate discounts for autopayments as they fight to capture market share. Glick says comparing at least three lenders can help you shave 0.5% to 1% off your rate. As you shop, note that the differences between lenders go beyond basic rates and fees. Debbie Calixto, sales manager at mortgage lender loanDepot, points out that some lenders charge early termination fees while others don't. These hidden costs can impact your total borrowing expense, especially if your plans change. Prioritize high-ROI home improvements HomeAbroad's Glick suggests focusing on projects that offer a significant return on investment (ROI), add resale value or reduce utility bills rather than discretionary upgrades. For example, energy-efficient windows or a new HVAC system can increase your home's value by 5% to 10% while potentially qualifying for tax-deductible interest. With home values up but inventory tight, improvements that boost your property's appeal become even more valuable. Consider getting a HELOC If you're in a stable financial position, Calixto says now could be a great time to set up a HELOC, even if you don't need the funds right away. A HELOC gives you access to funds when needed without holding a balance upfront. "[You] only [pay] interest on the amount borrowed," Calixto explains. That makes this type of borrowing a flexible financial safety net for future expenses. Timing may work in your favor with HELOCs. Since these products have variable rates, expected Federal Reserve rate cuts mean your rate could drop over time. Perveiler notes that today's rates are already lower than earlier this year, and they could fall further if the market shifts. Weigh the advantages and drawbacks of HELOCs and home equity loans Perveiler explains that HELOCs let you borrow only what you need. This helps you keep monthly payments manageable while taking advantage of lower starting rates and higher loan limits than credit cards. But their variable rates mean your payments can increase if market rates rise. Home equity loans work differently. They have fixed rates, which means predictable payments throughout the loan term. You get a lump sum upfront that you can spend or invest as you see fit, with no ongoing account fees. The downside is the risk of borrowing too much and paying unnecessary interest, or borrowing too little and needing another loan later. Origination fees and closing costs can also make them more expensive than HELOCs in some cases. The bottom line "Using your home equity can be valuable [for] consolidating debt, [funding high-return] investments or [improving] your monthly cash flow," says Calixto. "When used responsibly, [it] can be a powerful [way to] build wealth and increase financial flexibility." Before committing to either home equity borrowing option, speak with at least three lenders to compare rates, fees and terms. A trusted mortgage professional can help you achieve the right balance between immediate savings and long-term financial security.
Epoch Times
03-05-2025
- Business
- Epoch Times
Renting 60 Percent Cheaper Than Buying in Top 100 US Cities: Study
A recent Only five cities were found to offer cheaper rates for buying: Grand Rapids, Michigan; Pittsburgh, Pennsylvania; Lakeland, Florida; Philadelphia, Pennsylvania; and Miami, Florida. 'Unfortunately, high interest rates and escalating home costs are still pricing many Americans out of home ownership,' Amresh Singh, HomeAbroad founder and CEO, told The Epoch Times. 'New developments also tend to be more expensive and are just out of reach for many people.' Singh said it all comes down to the 'buy-to-rent' ratio. 'You have to determine the amount of your mortgage payment and taxes and compare that to the cost of a similar property for rent,' he said. 'If you're going to be paying a similar amount of money for rent, then it makes more sense to buy. However, if your mortgage payments and taxes will be much higher than renting, then leasing would be the better option.' Related Stories 4/29/2025 5/1/2025 A small buy-to-rent ratio means that home ownership is a more viable choice, but a higher buy-to-rent ratio would make renting a better choice. Singh also advocates for the '5-year' rule. 'If you're planning to stay in the home for just 5 years or less, then renting might make more sense because you may need more time to build equity in the house,' he said. 'If, on the other hand, you plan to spend 5 to 10 years in the home, buying would probably be the way to go as you can use that time to live in your investment and build wealth.' Other factors to be considered are the location of the property, historical appreciation, population, job growth in the region, and quality of life offered. 'It's all about the potential appreciation of the home,' he said. Another consideration for buying is being able to make the typically required 20 percent down payment. 'If you can't put down 20 percent, you may have to bear the additional costs of private mortgage insurance, which will be added to your monthly mortgage payments,' Singh noted. 5 Cities Where Buying Beats Renting Grand Rapids was named America's least expensive place to buy a home compared to renting, with a cost difference of just 1 percent. According to the survey, the average monthly mortgage payments in Grand Rapids are $1,773, compared to the average monthly rent of $1,752. With a median home price of just $261,255 and a cost of living that's 5.5 percent lower than the average U.S. community, buying a home there may be a better financial option than renting. According to a recent report from The job market is booming, especially in the health-care industry, and the city also offers an abundance of family recreation from Lake Michigan beaches to over 75 parks and nature trails throughout the city. For adults, there are a large number of art galleries, museums, music venues, and restaurants. Pittsburgh's buy-to-rent ratio is 11 percent. Monthly mortgage payments average $1,164, while the average rent is $1,453. With a median home price of $229,000 and a cost of living rated 8.2 percent lower than the average U.S. community, Pittsburgh was listed as the second-most-affordable location to purchase a home. Lynne Bingham, leader of The Bingham Team at Howard Hanna Collier in Pittsburgh, was not surprised that the 'Steel City' ranked high as one of the best places to buy vs. rent property. 'We have been seeing an influx of people into the city and suburban areas because of the growing technology and medical industries,' she told The Epoch Times. Companies such as PayPal, Uber, and Google have been moving into the area, creating more jobs and attracting more people. 'This includes some young doctors from Boston and Connecticut, as well as younger people from New York, Washington, and even Texas,' Bingham said. While housing is affordable compared to many other American cities, property taxes tend to be on the higher side, she said. 'Of course, they still may be a bargain for those coming from New York or other areas in the Northeast.' Pittsburgh is considered a mid-sized city, with a population of over 300,000. It's the second-most populous city in Pennsylvania, and the entire Pittsburgh metropolitan area is home to over 2.4 million. Bingham noted that several sections of downtown Pittsburgh have undergone complete renovations, and some new luxury townhomes in the Strip District are garnering as much as $1.2 million. 'It's a great walkable area, and we've actually had a lot of seniors downsizing from larger suburban homes and moving into the area,' she said. Lakeland and Philadelphia ranked third and fourth, respectively, with a 15 percent buy-to-rent ratio. Median home prices in Lakeland are $340,000, and in Philadelphia, they are $350,000. While Miami is continuously noted as one of the country's most expensive areas, its buy-to-rent ratio is fairly low at 18 percent. Average monthly mortgage payments are $3,223, compared to average rents of $2,721. Current median home prices are $515,000. Most Expensive Areas to Buy Conversely, some of the nation's most expensive areas to buy are in the West and Midwest. San Jose, California, is ranked as the most expensive city in the United States to buy a home, compared to renting. With a buy-to-rent ratio of 131 percent, the average monthly mortgage payments are an astronomical $7,558, compared to average rentals of $3,268. San Jose's median home price is listed at $1.3 million. The city's cost of living is also 131 percent higher than the U.S. average. With a buy-to-rent ratio of 118 percent, Los Angeles is the nation's second-most expensive area to purchase a home. The median home price of $1.1 million carries a typical monthly mortgage payment of $6,499, compared to the average monthly rental cost of $2,984. The cost of living in Los Angeles is 61.7 percent higher than the rest of the country. Although located in the heart of the Midwest, Omaha, Nebraska, has a 117 percent buy-to-rent ratio, making it much less expensive to rent than to purchase. Monthly rents average $1,362, while monthly mortgage payments average $2,962. Median home prices in Omaha are $392,450. Rent-to-buy ratios in Austin, Texas, and Des Moines, Iowa, were both over 100 percent. Austin's average rent is $1,688, while mortgage costs typically exceed $3,600 per month. In Des Moines, monthly rents average $1,270, compared to mortgage payments of $2,584. Some areas of the country have more manageable cost differences between renting and buying, including Columbia, South Carolina; Tampa, Florida; and Palm Bay, Florida. In these areas, said Singh, deciding whether to rent or buy could be a more difficult choice. Singh said that the decision to buy versus rent should also factor in estimated home repair costs, additional monthly payments such as home insurance or homeowner association fees, and whether the buyer can retain ample savings after making a 20 percent down payment and covering closing costs. 'If any of these areas present a challenge, renting could present a better option,' he said.
CBS News
31-03-2025
- Business
- CBS News
What's the mortgage interest rate forecast for April 2025?
High housing costs have stalled many Americans' homebuying plans in recent years. But mortgage interest rates have dipped below their recent peaks, offering prospective buyers some relief. Despite this progress, economic uncertainties loom — which could affect the lending market. If you're house hunting, knowing where rates might head this April could help you calculate potential monthly payments and set a realistic budget before you fall in love with a home. See what mortgage interest rate you could qualify for here . Mortgage interest rates in April will likely stay in the 6.5% to 7% zone, according to Steven Glick, a licensed mortgage loan officer and director of mortgage sales at HomeAbroad, a real estate agency. However, a couple of other scenarios could play out. We spoke with three industry professionals who broke down what economic conditions would trigger rates to rise, fall or hold steady in the coming weeks: These economic factors could push mortgage rates higher: A significant Fed policy change might lead to lower mortgage rates. Here are three potential rate-reducing factors: See how low of a mortgage interest rate you'd currently qualify for now . The current economic picture shows mixed signals, which may keep mortgage rates stable: Mortgage professionals recommend watching five factors closely if you're buying a home soon: Mortgage rates in April will likely stay steady, according to the experts we spoke to. They might ease later in 2025, but waiting could backfire if home prices rise or inventory tightens. Your best move? Consult a few lenders now to understand your options. "Focus on your affordability," Calixto advises. "If you find a home that fits your needs and the monthly payment is manageable, that's a signal it may be the right time to buy." Get pre-approved to know what you qualify for and be ready to act quickly. Remember, you can always refinance later if rates fall.
CBS News
31-03-2025
- Business
- CBS News
What's the home equity loan interest rate forecast for April 2025?
High interest rates have made borrowing money tough for Americans in recent years. Sticky inflation and the Federal Reserve's corresponding rate increases drove up costs across all loan types, putting many financial goals out of reach. There's hope, however, if you own a home. Home equity loan rates have dropped over the last year, approximately, even as other financing options remain expensive. Some homeowners may now find it more affordable to use this to finance renovations, consolidate debt or even to pay for education expenses. But the shifting economic environment could continue to impact these rates over time. What might happen to them in April 2025? We spoke with three home equity experts to get their forecasts. They share their market insights and what you should know if you're considering tapping into your home's value this spring. Start by seeing how much home equity you could borrow here . The experts we spoke to predict home equity loan interest rates will hold steady in April 2025. "I'm expecting [they] will hover around 8.3% to 8.5% — stable from where we're at now, maybe a slight dip," says Steven Glick, a licensed mortgage loan officer and director of mortgage sales at HomeAbroad, a real estate agency. This stability stems from the Federal Reserve's recent pause on rate cuts and the 10-year Treasury yield sitting near 4.2%. Debbie Calixto, sales manager at mortgage lender loanDepot, agrees, noting that "rates are likely to stay near the mid-to-low 8% range." She points out that while inflation is cooling and the economy shows signs of slowing, any policy shifts might not impact rates until later in the year. See what home equity loan rate you could lock in now . These three factors will determine where home equity loan rates go this spring, according to industry professionals: The Federal Reserve's decisions can influence what you'll pay for a home equity loan . "Home equity rates are closely tied to the prime rate, which follows the Fed's target federal funds rate," says Chad Wilcox, senior vice president of lending at Credit Union of Colorado. Glick emphasizes that the Fed's moves (or lack thereof) set the tone. "[The] March 19 decision to pause cuts keeps borrowing costs steady," he points out. While the connection isn't direct, Fed signals still matter. When the Fed signals cuts, it nudges lender confidence and may slightly ease rates. Inflation trends also shape home equity loan rates. "Rates remain elevated because inflation — while down from peak levels — has been sticky," Wilcox explains. "Strong wage growth and consumer demand have made the Fed cautious, keeping lending rates higher across the board." Current economic policies, like tariffs or spending shifts, add another layer of uncertainty to the rate outlook, Glick emphasizes. "The Fed's worried these could heat inflation, which might push lenders to bump rates to cover risk." Market watchers are monitoring April policy announcements that could signal which direction rates might head next. Beyond Fed headlines, pay attention to what's happening in the bond market. "Long-term bond yields, especially the 10-year Treasury, serve as a key benchmark for lenders when pricing home equity loans," says Calixto. "If it climbs — say, from tariff-driven price hikes — rates could creep up," warns Glick. "If it drops, we might see some relief." These yield movements typically happen before lenders adjust their rates. So, you get a preview of possible home equity loan costs in the coming weeks. "Right now, American homeowners are sitting on over $34 trillion in home equity, the strongest position since just after World War II," Calixto highlights. This creates an opportunity for many homeowners, especially with home prices continuing to rise. Also, pre-pandemic mortgage rates have created a unique situation today. "About half of mortgage holders have an interest rate under 4%," says Patrick O'Shea, a mortgage advisor at Edge Home Finance, a mortgage broker. "That makes home equity loans more attractive than a cash-out refi." If you're locked into a rate below 6%, a home equity loan lets you access cash without changing your favorable mortgage rate. Glick has observed a steady demand for home equity loans. "People aren't selling, so they're borrowing against what they've got," he says. Lenders are responding with competitive offers, even as they maintain careful underwriting standards. Home equity rates should remain stable through April, making this a good time to consider accessing your property's value. But O'Shea cautions against rushing into it. "Sometimes, curbing your spending or coming up with alternative ways to get out of debt is better than borrowing more money," he suggests. Meeting with a few lenders will help you understand your options and make the best decision. Learn more about your current home equity loan options here .
