There are multiple advantages to borrowing with a HELOC this November.
Zhanna Hapanovich/Getty Images
When borrowing with a home equity loan, the pros and cons of the product are relatively easy to understand. That, in large part, is due to the way the product is structured, with a fixed interest rate that will remain the same until (or unless) it's refinanced by the homeowner. And with interest rates here considerably lower than they have been and with alternative products like personal loans and credit cards materially more expensive, a home equity loan can be a smart choice for homeowners in need of extra financing right now.
Home equity lines of credit (HELOCs), however, are now one of the cheapest borrowing tools on the market. That's mainly because HELOCs have variable rates that can change based on market conditions. And those market conditions over the past year, approximately, have been much cooler than they were in recent years. Because of this variability, however, the pros and cons surrounding this product can be a bit more fluid.
But by accurately understanding them this month, homeowners considering a HELOC can better determine their next steps. Below, we'll break down four timely pros and cons that homeowners should know this November, specifically.
See how low your current HELOC interest rate offers are here.
HELOC pros and cons homeowners should know this November
Don't rush to secure a HELOC in today's market without first calculating your potential repayment costs (remember that your home is collateral in this exchange). And be sure to understand these specific pros and cons, too:
Pro: A considerably lower interest rate than alternatives
Personal loan interest rates are around 12% this November. Credit card interest rates are around 21% and even home equity loan rates, while down, are still over 8%. But qualified borrowers can secure a HELOC rate under 8% right now. That makes it not only the cheapest way to borrow equity but also one of the cheapest ways to borrow money overall right now. With a rate almost three times cheaper than a credit card, for example, homeowners in need of a new line of credit may want to skip the plastic and instead explore their HELOC options now.
Get started with a HELOC online today.
Con: Diminishing chances of a December rate cut
The HELOC's variable interest rate has made it an attractive option alongside the Federal Reserve rate cuts that have been issued over the past year, approximately. But the chances of another rate reduction when the central bank meets again in December, while still high, are diminishing. And that means HELOC expenses will likely remain the same versus consistently decreasing as they largely have since September 2024.
The chances of a December Fed rate cut are now around 70%, according to the CME Group's FedWatch tool, while they were comfortably over 90% in recent weeks. And that's without additional economic data points that are currently frozen due to the ongoing shutdown. When those are inevitably released, the chances of a rate cut could be further diminished. So keep this in mind now, so you can better budget both for December and the months that follow.
Pro: A sizable amount of equity to leverage
A report released earlier this year showed the average homeowner with around $300,000 worth of equity to utilize now. And a summer report detailed how cumulative home equity levels are at a record high. So if you're thinking about a HELOC this November, you may have a sizable amount of equity to leverage as needed. That said, it's important to avoid overborrowing, too. Home equity levels can rise or fall based on multiple factors, and you want to avoid putting yourself in a position where you're borrowing too much as your home's value is declining at the same time.
Con: Time is running out to use it for tax-deductible purposes
The interest paid on a HELOC can qualify for a tax deduction if used for eligible home repairs and projects. So, if you intend to use the line of credit for those reasons, that's a pro worth understanding. The con, however, is that time is running out to use it for tax-deductible purposes in 2025. With approximately nine weeks left in the year, if you don't secure the HELOC and use it for these projects now, you'll delay what could be a sizable deduction into the following year. That means not seeing any material difference in your tax bill until tax season in 2027. Acting promptly now, however, avoids this increasingly likely scenario.
The bottom line
A HELOC is a constantly evolving financial tool that homeowners can strategically leverage to their benefit if they understand these timely pros and cons and monitor others over their draw and repayment periods. By understanding the market dynamics and how a HELOC responds, these homeowners can better improve their chances of borrowing success both this November and over the long term.
Edited by Angelica Leicht
