3 home equity borrowing moves to make before the March Fed meeting

With so many ways to borrow money, finding the most cost-effective option can be daunting. But finding affordable ways to borrow is always important, especially in the economic climate of early 2025. With stock market uncertainty, a small but steady rise in inflation and interest rate cut relief paused, borrowers will need to be judicious about how they get their financing. And they’ll need to be especially careful if they do so via their home equity since their home will function as collateral in these exchanges.

Still, home equity loans and home equity lines of credit (HELOCs) are generally much more affordable than credit cards and personal loans. And with the average amount of home equity sitting around $320,000 right now, there’s plenty to potentially utilize. But it makes sense to go into the process clear-eyed, with a strategic approach, especially before the Federal Reserve meets again to determine interest rate policy in March. 

But what, specifically, should prospective borrowers do ahead of that March 18 meeting? Below, we’ll break down three smart home equity borrowing moves to make before then.

Start by seeing how much home equity you could borrow here.

3 home equity borrowing moves to make before the March Fed meeting

Here are three smart home equity borrowing moves many homeowners would benefit from making now, before the March Fed meeting commences. 

Determine exactly how much you need to borrow

While the average home equity amount may be high now, it doesn’t mean that you should withdraw all or even most of it. You should only borrow what you can comfortably afford to repay. Borrowing more than you can pay could jeopardize your homeownership as the lender could take the property. Instead, precisely determine how much you need to borrow now. This will then allow you to determine your future monthly payments, as you can crunch those costs using an online calculator. By knowing this figure first, you’ll also be better able to shop for home equity loans and HELOCs online.

Explore your current home equity loan options now.

Monitor interest rates daily

Home equity loan and HELOC interest rates change daily, sometimes to a significant degree. So pay close attention to the interest rate climate in the coming weeks to better determine a time to secure a low rate opportunity. And remember that rates, while likely to adjust more materially in the days surrounding a Fed meeting, can also change before that point, too. Lenders don’t need to wait for formal Fed action to adjust their offers and if lenders feel that a pause in rate cuts will be extended, or, if they think rates will soon be heading upward, they may adjust their offers preemptively. Be prepared to act to avoid that scenario.

Choose a home equity loan over a HELOC

Sure, today’s home equity loan interest rates are slightly higher than those tied to HELOCs (8.40% versus 8.28% as of February 21). But the big difference is in the rate structure: home equity loan rates are fixed and HELOC rates are variable. In today’s uncertain economy, then, a home equity loan is the safer choice. Not only will borrowers be able to precisely budget their future repayments, but they’ll be able to do so knowing that they’re protected from any volatility in the broader rate climate. HELOC rates, however, can change monthly, perhaps to a significant degree in March and April, depending on what does (and doesn’t) occur in the Fed meeting. To circumvent this, then, borrowers should strongly consider a home equity loan over a HELOC.

The bottom line

Homeowners should take a smart and calculated approach to borrowing from their home equity at all times, but particularly now, ahead of a Federal Reserve meeting in March that could impact the wider interest rate climate. By making the above three moves now, borrowers will better protect themselves from financial harm and improve their chances of home equity borrowing success both in March and in the months and years to come.

Learn more about your home equity loan options here now.