6 risks to consider before tapping into your home's equity

With interest rates high and economic uncertainty looming, many homeowners are eyeing their home equity as a potential source of borrowing. After years of rapidly rising home values, the average homeowner with a mortgage now has about $300,000 in home equity, with about $190,000 potentially tappable. At the same time, home equity loan rates remain relatively low compared to many other borrowing options.

If housing prices rise over time, you'll miss out on borrowing from the increased equity — at least until your loan is fully repaid. Risk of paying too much in interestWhile home equity loan rates are fixed, HELOC rates are typically variable, meaning they can change over time based on the overall rate environment. While HELOCs often have relatively low introductory interest rates, but if rates rise over time, this type of borrowing may end up becoming quite expensive.

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