Are you in need of a large sum of money? You could access the money you need in a variety of ways. However, when you borrow money, it’s important to consider the cost of the financial product you use to do so. Some, like credit cards and personal loans, can come with high interest rates and other fees while others, like home equity loans, can offer more competitive interest rates, reducing your cost of borrowing. 

But, there’s a tradeoff to consider. Unlike unsecured lending options that typically come with high interest rates, home equity loans are secured by your home. So, if you don’t make the home equity loan payments you agreed to, you could be risking your home. With that in mind, it’s important to be sure you can afford your payments before you take out a home equity loan. 

But, what if you need to get your hands on $30,000? Since the average American homeowner has about ten times that amount in equity in their homes, a home equity loan may be a viable option. But, how much would that loan cost per month? For homeowners considering accessing this amount of equity, it helps to know exactly what their payments will be.

Compare your home equity loan options now. 

How much would a $30,000 home equity loan cost each month?

When you take out a home equity loan, there are a few factors that dictate how much your payments will be. Loans for higher values will typically cost more monthly than loans with lower values. Interest rates and terms also play a meaningful role in the monthly cost of home equity loans. 

Today’s 10- and 15-year home equity loans come with average interest rates of 8.77% and 8.75%, respectively. Here’s how much money you would need to pay per month on a $30,000 home equity loan at those rates: 

• 10-year home equity loan at 8.77%: Your monthly payment on this loan would be $376.30. If you made minimum payments over the life of the 10-year loan, your total interest expense would be $15,156.38 – for a total payoff cost of $45,156.38. 
• 15-year home equity loan at 8.75%: If you chose the 15-year home equity loan option with an 8.75% interest rate, your monthly payments would be $299.83 and your total interest cost would be $23,970.23. That brings your total payoff cost to $53,970.23. 

Based on these numbers, if you’re looking for the lowest monthly payment possible, you should choose a 15-year home equity loan. On the other hand, if you’re interested in long-term savings and can afford a higher monthly payment, the 10-year home equity loan would be your better option. 

There’s a third option to consider, too: a home equity line of credit (HELOC). HELOCs come with variable interest rates and payments that may change based on the overall interest rate environment. And, that could be good news considering the high interest rates of today. If you open a HELOC, and interest rates fall, you could experience savings when compared to traditional home equity loans. 

The average HELOC interest rate is currently 9.16%. If you took out a HELOC, and your interest rate remained the same for the life of the credit line (with a 15-year repayment period), you would pay $307.14 per month. Your total interest expense would be $25,285.56, and your total payoff cost would be $55,285.56. But, it’s unlikely that your interest rate would stay the same for the life of the credit line. And, while interest rates may fall ahead, they could also increase. So, only choose this option if you can afford a potentially higher payment in the future. 

Tap into your home equity to access the money you need today. 

Smart reasons to take out a $30,000 home equity loan now

There are several smart reasons it may be wise to take out a $30,000 home equity loan:

• To cover summertime home repairs: If your home needs summertime repairs or renovations, a home equity loan could provide the funding you need to cover the cost of those repairs. And, using a home equity loan for this purpose could result in tax benefits. 
• To help with the down payment on a second home or investment property: If you’ve dreamt of owning a second home or would like to purchase an investment property, you may need to make a large down payment. So, a $30,000 home equity loan could come in handy. 
• To help pay for college: It’s wise to further your education, but doing so can also be costly. A $30,000 home equity loan could help you cover the cost of a college degree. 

Tap into your home equity now to cover these and other potential expenses. 

The bottom line

A $30,000 home equity loan will typically cost anywhere from $299.83 to $376.30 per month, depending on whether you choose a 10-year or 15-year term. As you decide which term works best for you, consider your short- and long-term goals. Keep in mind that while a 15-year term may offer lower monthly payments, it may lead to a much higher interest expense in the end. Compare your home equity loan options today.