Timing is a tricky thing. When it comes to finances, it’s sometimes hard to know whether one should be proactive or reactive. There’s even a tendency to put things off until things have hit rock bottom or until every star has aligned.
This isn’t to say there’s a right way or a wrong way when it comes to taking on a loan or accumulating debt. These are big decisions and there’s quite a few variables to wade through.
Let’s look at some factors that should be considered when deciding if now is the right time to apply for a home equity loan.
Why do I need the Loan?
This might be the biggest question. You never want to take a loan or put your house up as collateral unless the reason is a good one. There are a ton of good reasons—medical emergency, business opportunity, home renovations.
If the reason feels legitimate then the timing is probably legitimate as well.
Will I get the Best Interest Rate and Repayment Plan?
It’s a simple question: will you get the best deal when you apply? If you believe that there’s a better interest rate around the corner or that you can improve your credit score, then the best advice might be too wait.
Timing isn’t just about what’s happening in your life. It’s also about what’s happening with the lender and if you can secure the best deal.
What if my Situation Changes?
If you need the money today but believe that your situation can change, then it still might make sense to borrow money against your home. In this case, the solution might be a home equity line of credit where the funds will be available to you. Like any line of credit, you only must pay back what you use so if your situation changes then no harm done.
Applying for loans is a big deal and the timing must be right. Be honest with your situation and logical and, most importantly, speak with a professional who can help guide you to the right decision.