Homeowners in need of a large financing source don’t have to look too far to find it right now. With the average homeowner currently in possession of approximately $330,000 worth of home equity, chances are strong that you can cover most (or all) of your current big expenses by accessing your home equity now. And with interest rates on the decline one of the better ways to do so is with a home equity line of credit (HELOC). This unique home equity borrowing product comes with a variable interest rate subject to change every month. While that would have been a distinct disadvantage in recent years it’s a major help now that interest rates are falling again.

This can make budgeting for a HELOC a little tricky, however. While a line of credit in the amount of $75,000 will still leave plenty of equity to potentially utilize in the future, borrowers should first calculate these potential monthly payments in order to best determine their affordability. Below, we’ll do that math, tied to a few potential interest rate scenarios.

See how low of a HELOC interest rate you could secure here now.

How much will a $75,000 HELOC cost per month now that rates are falling?

The average HELOC interest rate is 8.73% as of October 18. Here’s what a $75,000 HELOC would cost monthly, then, tied to two common repayment periods:

• 10-year HELOC at 8.73%: $939.14 per month
• 15-year HELOC at 8.73%: $748.70 per month

With additional rate cuts of 25 basis points each possible for when the Federal Reserve meets again in November and December, it’s also important to calculate what your payments could be then, assuming HELOC rates fall by the same amount. Here, then, is what they could look like assuming a 25 basis point reduction in November:

• 10-year HELOC at 8.48%: $929.09 per month
• 15-year HELOC at 8.48%: $737.68 per month

And here’s what they’d be if they dropped by half a percentage point from today’s average:

• 10-year HELOC at 8.23%: $919.10 per month 
• 15-year HELOC at 8.23%: $726.73 per month

Just note that these calculations are all averages. HELOC rates are unlikely to fall by the precise amount that the federal funds rate does (nor is it likely to rise by the same increments either). And these averages are what’s available for qualified borrowers with high credit scores and clean credit backgrounds. If you don’t have both, you may have to pay a higher rate.

Determine your HELOC eligibility online today.

What about home equity loans?

If you’re looking to borrow home equity at the lowest interest rate possible, then a home equity loan may be better for you. This product, which comes in a lump sum versus the HELOC’s revolving line of credit, has an average interest rate of 8.36% right now. But that interest rate is fixed, which can be a negative in today’s cooling rate climate. If rates fall after you’ve opened the loan you’ll need to refinance (and pay to refinance) to lock in that lower rate. HELOCs will simply adjust independently. However, as noted, HELOCs are difficult to accurately budget for as your payments can rise and fall each month. Home equity loans are more predictable and, combined with the lower rate, may be preferential for some homeowners right now.

The bottom line

If you’re a qualified borrower looking to open a $75,000 HELOC now, expect monthly payments to be somewhere in the range between $749 and $939 each month. Those payments could become even cheaper in the months ahead, too. But due to their variable rates, HELOC payments could also rise month-over-month, as well. So consider that potential before acting. And no matter which way you ultimately decide to borrow from your home equity, be sure to only withdraw an amount that you can easily repay. Since your home serves as collateral in these borrowing circumstances you could risk your ownership if you fail to pay everything that you’ve borrowed.

Have more questions? Learn more about your best HELOC options here today.