If you’re looking to borrow a five-figure sum of money, there are a series of factors to consider before getting started. From the specific product to the interest rate attached to that product to the intended use, multiple factors play in an important part in the decision-making process. But arguably none is as important as the cost calculations. If you can’t comfortably afford to repay all that you’ve borrowed, then you could wind up putting yourself in a worse financial position than if you hadn’t acted at all.

This is particularly true for home equity loan borrowers, who use their home as collateral in these borrowing circumstances. To avoid risking your homeownership, then, it’s important to calculate your potential costs in advance. Fortunately, right now is a smart time to tap into your home equity. 

With interest rates relatively low and the average amount of home equity approaching $330,000 currently, there’s a lot of flexibility for qualified borrowers. This is true for those looking to tap into most of that funding as well as for those who are looking for just a small amount. A $30,000 home equity loan, then, could be better for those in the latter group. A loan in this amount will leave the majority of equity untouched for potential use in the future while still providing a five-figure sum to utilize now. And with recent rate cuts courtesy of the Federal Reserve, this could be the best way to borrow $30,000 right now. But how much will it cost per month now that rates have been cut? That’s what we’ll calculate below.

See how low of a home equity loan rate you could secure here.

How much does a $30,000 home equity loan cost per month now that rates were cut?

Your monthly home equity loan payments will be determined by two primary factors: your interest rate and your repayment term. Here’s what a $30,000 home equity loan would cost, then, tied to two common repayment terms and available home equity loan rates:

• 10-year home equity loan at 8.46%: $371.32 per month
• 15-year home equity loan at 8.38%: $293.32 per month

While the longer term comes with a slightly lower interest rate and spread-out payments, borrowers should also understand the interest costs associated with the extended term. On the 10-year loan, you’ll only pay a total of $14,557.87 in interest while with the 15-year loan, you’ll pay $22,796.78 – an $8,238.91 difference between the two. So make sure the lower monthly payments are valuable to you because they’ll come with a hidden cost of higher interest over the life of the loan.

Get started with a home equity loan online now.

Should you wait for home equity loan rates to fall further?

While it may be tempting to wait for home equity loan interest rates to decline further, that could be a mistake. To begin, delaying your financing will also delay paying for the expenses you have and that could result in compounded debt, depending on your financial situation. 

Additionally, there’s no guarantee that rates will fall or by how much, if and when they do. And home equity loan rates don’t rise or fall in the precise pattern that the federal funds rate does anyway. So a 25 basis point cut in November from the Fed is unlikely to immediately result in a drop in home equity loan rates by the same amount. For all of these reasons, then, it may make sense to lock in a low home equity loan rate now – and refinance it if rates drop by a significant amount in the future.

The bottom line

A $30,000 home equity loan comes with monthly payments between $294 and $372, approximately, right now. But those payments (and rates) will only be offered to those borrowers with the highest credit scores and cleanest credit profiles. So, if you don’t have both, try working on improving them before applying. But don’t wait too long to act, either, as today’s interest rates can and likely will change relatively quickly.

Have more questions? Learn more about your current home equity loan options here.