Is February the Right Time for a HELOC? Here Are 3 Smart Moves to Make Now
Home equity lines of credit, or HELOCs, have long been a go-to solution for homeowners looking to tap into the value of their property. They offer access to substantial financing — often at lower interest rates than personal loans or credit cards — because your home acts as collateral. That said, timing your application is crucial, especially since HELOCs typically come with variable interest rates that can fluctuate month to month.
Right now, February may be a particularly smart time to explore a HELOC — if you approach it strategically. With interest rates holding steady and the Federal Reserve not scheduled to meet again until March, homeowners have a rare window to plan carefully and make informed decisions.
Here are three savvy steps to take if you’re thinking about a HELOC this month.
1. Shop Around While Rates Hold Steady
Interest rates on HELOCs are influenced by a variety of economic factors, but perhaps the most significant driver is the Federal Reserve’s monetary policy. Over the past year, rates have gradually declined, and as of early 2025, HELOC rates are at their lowest point in 18 months.
Importantly, February offers a brief pause in Fed activity — the next interest rate decision won’t come until March. That means there’s unlikely to be any major rate changes this month, giving borrowers a window of opportunity to compare offers without the added pressure of fluctuating terms.
Don’t just go with your current mortgage lender by default. Reach out to at least three different lenders to get rate and term quotes. Once you’ve gathered some competitive offers, bring them back to your primary bank or lender and ask if they’re willing to match or beat them. In a stable rate environment, even small differences in interest rates or loan terms can save you a significant amount over time.
2. Compare a HELOC to a Home Equity Loan
While HELOCs offer flexible borrowing and interest-only payment options during the draw period, they also come with variable interest rates. That means your monthly payments could go up if rates increase.
In contrast, a home equity loan gives you a lump sum up front with a fixed interest rate. That can offer peace of mind if you prefer predictable monthly payments or are concerned about rates rising in the future.
As of early February, the average HELOC rate is around 8.26%, while home equity loans average slightly higher at 8.44%. While HELOCs may seem more attractive based solely on rate, don’t overlook the potential volatility of a variable rate loan. Consider your financial stability and risk tolerance. If you plan to pay off your debt quickly, a HELOC could be the better fit. But if you’re thinking long-term, the stability of a home equity loan might be worth the slightly higher initial rate.
3. Keep an Eye on the Broader Rate Climate
HELOCs are most beneficial in a falling rate environment, like what we saw in late 2024 when the Fed began cutting rates after a period of aggressive hikes. However, predicting where rates are headed next is far from easy.
At its January meeting, the Fed paused rate cuts, signaling that inflation, while down from its peak, remains a concern. Economic signals are mixed, and while many believe additional cuts are on the horizon, there’s no guarantee of when — or how many — there will be.
That makes it critical to be realistic about future interest rate trends. Don’t assume that rates will continue to drop and that your HELOC payments will stay low indefinitely. Build your budget around today’s numbers, not tomorrow’s hopes. If you’re not comfortable with that level of uncertainty, a fixed-rate loan may provide better peace of mind.
Tapping into your home equity through a HELOC can be a smart financial move — but only if you do your homework and approach the process with clear-eyed strategy. February presents a stable window of opportunity thanks to paused Fed activity and low HELOC rates. Use this time wisely: shop around for the best offers, compare HELOCs to home equity loans, and be honest with yourself about where rates may be headed in the near future.
By making these smart moves now, you’ll be in a stronger position to borrow confidently — and responsibly — whether you’re funding a renovation, covering a major expense, or consolidating debt.