Aug 01, 2022
By Mike Mesch, ASA Partner at Terry Lockridge & Dunn
With inflation at record levels, the Federal Reserve may continue to raise interest rates in the near future. How should we react? What opportunities may exist in this environment?
At this point, some of you are relishing in your 30-year locked rate mortgage at 2.5% (as you should be) but something you might have missed is the opportunity to set up a Home Equity Line of Credit (aka a HELOC) at the same preferential rates. I would advise, there may still be a reason to.
A HELOC allows you to access the equity in your home (up to 90% if the funds are used for home improvements or 80% if used for other things) in the event you need the money. Right now, you may be able to lock in an interest rate at today’s rates for 5 years. This HELOC could be used within the next 5 years (if needed) for emergencies or opportunities as they may arise.
Closing costs are usually inexpensive for these types of loans and the process is fairly quick and painless.
I always advise clients that, in a period of economic uncertainty, those with cash or access to cash are going to be able to react to opportunities and the associated benefits of “buying low” to later “sell high.” This may just be another opportunity to have access to such funds.
If you would like to discuss your specific circumstances, feel free to reach out to Mike at firstname.lastname@example.org.