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How much would a $150,000 HELOC cost per month?
With the Fed rate remaining locked at a 23-year high, home equity borrowing has been an attractive option for homeowners recently. When you borrow against your home’s equity, your home is used as collateral, which can result in more favorable interest rates compared to unsecured borrowing options. So, for many homeowners, home equity borrowing is one of the best and most affordable ways to access large sums of money — especially now that the average amount of home equity is closing in on $300,000.
Borrowing against your home equity could become even cheaper soon, too. Inflation has been cooling over the last four months, so the Federal Reserve is expected to make cuts to its benchmark rate as soon as September. When that happens, it is likely to cause interest rates across various lending products to decrease, including home equity loans and home equity lines of credit (HELOCs). That would be good news for homeowners who want to borrow money at the lowest rate possible.
But before you tap into your home’s equity, it’s important to understand the financial implications of doing so. For example, if you’re going to borrow $150,000 from your home’s equity with a HELOC, you need to know the monthly costs associated with it. Here’s what you can expect to pay for a HELOC in that amount based on current market conditions.
Find out what today’s best home equity borrowing rates are here.
How much would a $150,000 HELOC cost per month?
Right now, the average HELOC interest rate is 9.37%, which is significantly lower than the average credit card rate (which is closing in on 23%) and the average personal loan rate (which hovers near 12% currently). So for homeowners with $150,000 in available equity, a HELOC offers one of the most cost-effective borrowing solutions right now.
To illustrate, here’s a breakdown of the costs for both 10-year and 15-year HELOC repayment periods:
- 10-year HELOC at 9.37%: $1,930.30 monthly, totaling $81,636.35 in total interest paid
- 15-year HELOC at 9.37%: $1,554.59 monthly, totaling $129,826.54 in total interest paid
While a $150,000 HELOC would cost between $1,554.59 and $1,930.30 monthly if fully drawn now, it’s crucial to remember that HELOC rates are variable. They typically adjust monthly, so your costs may change over time.
The Federal Reserve is also expected to start cutting interest rates starting next month, with the first interest rate cuts anticipated to be 25 basis points. If HELOC rates decrease by 25 basis points to 9.12%, here’s how the monthly payments would look:
- 10-year HELOC at 9.12%: $1,909.89 monthly, totaling $79,187.02 in interest paid.
- 15-year HELOC at 9.12%: $1,532.13 monthly, totaling $125,782.74 in interest paid.
Keep in mind that these calculations assume you borrow the full $150,000 immediately and make consistent payments. In reality, HELOCs offer more flexibility than that. You can borrow only what you need, when you need it, potentially reducing your overall interest costs.
If interest rates continue to decline, which seems increasingly likely, both your monthly payments and the total interest paid on this HELOC could decrease further.
Learn more about the lowest HELOC rates you could qualify for here.
Are home equity loans the more affordable alternative?
With a current average rate of 8.52%, a $150,000 home equity loan with a term of 15 years would result in monthly payments of approximately $1,478.87. This amounts to a total interest payment of $116,196.31 over the life of the loan, making it slightly more affordable than a 15-year HELOC at today’s rates.
That said, affordability isn’t the only factor to consider. It’s important to also weigh the trade-offs between home equity loans and HELOCs, which include:
- Rate structure: The key difference between HELOCs and home equity loans is that home equity loans come with fixed interest rates. HELOC rates are variable and may decrease if market conditions change. This means HELOC borrowers could potentially benefit from future rate reductions without refinancing.
- Flexibility: HELOCs allow borrowers to draw funds as needed, potentially reducing overall interest costs. Home equity loans, in contrast, provide a lump sum upfront.
- Refinancing costs: If rates drop significantly, home equity loan borrowers would need to refinance to take advantage of lower rates. This process incurs closing costs, which can be substantial and may offset the benefits of a lower rate.
- Long-term considerations: While the fixed rate of a home equity loan provides certainty, it may become less competitive if market rates decline sharply. HELOC borrowers would automatically benefit from such declines.
The bottom line
In today’s economic landscape, both HELOCs and home equity loans can be affordable ways to borrow $150,000. Ultimately, though, the best choice between a HELOC and a home equity loan depends on your circumstances. If you prioritize payment stability and are comfortable with the current 8.52% rate, you might prefer a home equity loan. If you want to capitalize on future rate decreases and value flexibility, you might find a HELOC more suitable, despite the higher initial rate.
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Yellowstone hiker burned when she falls into scalding water near Old Faithful, park officials say
Yellowstone National Park, Wyo. — A New Hampshire woman suffered severe burns on her leg after hiking off-trail in Yellowstone National Park and falling into scalding water in a thermal area near the Old Faithful geyser, park officials said.
The 60-year-old woman from Windsor, New Hampshire, along with her husband and their leashed dog were walking off a designated trail near the Mallard Lake Trailhead on Monday afternoon when she broke through a thin crust over the water and suffered second- and third-degree burns to her lower leg, park officials said. Her husband and the dog weren’t injured.
The woman was flown to Eastern Idaho Regional Medical Center in Idaho Falls, Idaho for treatment.
Park visitors are reminded to stay on boardwalks and trails in hydrothermal areas and exercise extreme caution. The ground in those areas is fragile and thin and there’s scalding water just below the surface, park officials said.
Pets are allowed in limited, developed areas of Yellowstone park but are prohibited on boardwalks, hiking trails, in the backcountry and in thermal areas.
The incident is under investigation. The woman’s name wasn’t made public.
This is the first known thermal injury in Yellowstone in 2024, park officials said in a statement. The park had recorded 3.5 million visitors through August this year.
Hot springs have injured and killed more people in Yellowstone National Park than any other natural feature, the National Park Service said. At least 22 people have died from hot spring-related injuries in and around the 3,471-square-mile national park since 1890, park officials have said.