My rental property is paid off, but I need cash. Is this a bad time to take out a $50,000 HELOC?

The Federal Reserve's decision to raise its benchmark rate by a quarter point, to a range of 3.75%–4.0%, matters for anyone considering a home equity line of credit. HELOC rates typically track the prime rate, which moves with Fed policy, so a new line of credit today would likely carry a higher starting rate than one opened earlier in the tightening cycle.

For a paid-off rental property, the equity is real, but accessing it is a separate decision from whether the property is debt-free. A HELOC on a rental property may carry a higher rate than one on a primary residence, and lenders often apply stricter underwriting to investment properties.

What to watch: whether the Fed signals further increases or a pause, since HELOC rates are variable and adjust over time. Also compare the fully indexed rate, not just any promotional rate, and confirm how repayments would interact with rental income and taxes.