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Here’s what a $20,000 HELOC costs monthly now that rates were cut
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While most Americans have a limited source of borrowing options often topped by personal loans and credit cards, homeowners have a bit more to choose from. Thanks to their home equity, which is now near a record average of around $330,000, owners can tap into their homes to help finance any number of expenses, large or small. And there are multiple ways to do so, ranging from cash-out refinances to reverse mortgages (for homeowners 62 and older) to home equity loans.
One cost-effective home equity option now is a home equity line of credit, also known as a HELOC. HELOCs work similarly to credit cards, in the sense that you borrow as needed over time versus obtaining one lump sum. But, unlike credit cards, HELOCs come with significantly lower interest rates. And those rates are poised to drop even further as the Federal Reserve issues rate cuts, as they did in September. What would a $20,000 HELOC cost monthly, then, now that rates have been reduced? That’s what we’ll calculate below.
Start by seeing what HELOC rate you qualify for here now.
Here’s what a $20,000 HELOC costs monthly now that rates were cut
Before calculating the potential costs of a HELOC, no matter the amount, it’s important to remember that HELOC rates are variable, meaning that they’ll change over the repayment period. While this is a major disadvantage when interest rates are climbing, it can be a big benefit now with rates on the decline again.
That said, it’s difficult to predict with certainty what your HELOC rate will be in the months and years ahead, as rates will change over that time. Here’s what a $20,000 HELOC costs monthly now that rates were cut, tied to two common repayment periods:
- 10-year HELOC at 8.94%: $252.70 per month
- 15-year HELOC at 8.94%: $202.14 per month
But what happens if the Fed issues a rate cut of 25 basis points in November and another by the same amount in December? While HELOC rates won’t directly fall by the same amounts, it’s helpful to know what those payments could potentially look like if you wait. Here’s what they’d be if today’s rates are reduced by 25 basis points:
- 10-year HELOC at 8.69%: $250.01 per month
- 15-year HELOC at 8.69%: $199.18 per month
And here’s what they’d be if HELOC rates drop by a total of 50 basis points from where they are currently:
- 10-year HELOC at 8.44%: $247.33 per month
- 15-year HELOC at 8.44%: $196.25 per month
So not only are HELOCs relatively inexpensive now, but the monthly payments are likely to become even cheaper in the months to come. Still, it doesn’t make sense to wait. Because HELOCs adjust independently (unlike home equity loans which will need to be refinanced), you’ll automatically enjoy a lower rate when it drops. Don’t hesitate to open a HELOC now.
The bottom line
Right now, a HELOC comes with monthly payments between approximately $203 and $253, and those payments could potentially drop by a few dollars in the months ahead. But it’s important to remember that the best HELOC rates, just like the best rates on any other borrowing product, will be reserved for those with the highest credit scores. So if your credit isn’t in top shape now, you may not be offered the above rates. And remember that your home is the collateral in these borrowing circumstances so it’s critical that you only withdraw an amount of home equity that you can easily afford to pay back.
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As Trump puts Aurora, Colorado, in spotlight, mayor calls Venezuelan gang claims “grossly exaggerated”
The Republican mayor of Aurora, Colorado, said former President Donald Trump’s rally in the city Friday presented an opportunity “to show him and the nation” that Aurora is “not a city overrun by Venezuelan gangs.”
Mayor Mike Coffman made the statement Tuesday after weeks of misleading claims by the former president that the city was a “war zone” overrun with members of a Venezuelan gang.
During last month’s presidential debate against Vice President Kamala Harris, Trump pointed to Aurora as evidence that immigrants are “violently” taking over the town. “You look at Aurora in Colorado. They are taking over the towns. They’re taking over buildings,” Trump said.
Coffman said concerns about gang activity have been “grossly exaggerated.” He said the “incidents were limited to several apartment complexes in this city of more than 400,000 residents.”
Aurora Police Department Chief Todd Chamberlain said in a Sept. 20 press conference that the city is “not by any means overtaken by Venezuelan gangs.”
Central to the gang takeover claims is a viral video showing armed men entering an apartment in Aurora on Aug. 18. The incident led to the fatal shooting of a 25-year-old man, police said.
A local councilwoman shared the video on Facebook, claiming a gang took over “entire apartment complexes” in the city. Coffman shared a screenshot from the video and said the city is working to “request an emergency court order to clear the apartment buildings where Venezuelan gang activity has been occurring.”
Reuters/Isaiah J. Downing
However, after patrolling the complex, the police department said gang members had not taken over the building and residents were not paying rent to gangs. Coffman also visited the building and said tenants told him they did not have safety concerns but were alarmed by garbage “piling up” and a “rodent infestation.”
Coffman said tenants told him they had not been paying rent because “there was no longer an onsite property manager who had always collected the rent.” Coffman said initial reports of a gang takeover came from the property management company, CBZ Management. CBS News reached out to CBZ Management and has not heard back.
The mayor and councilwoman released a statement on Sept. 11 to “clear the record” and say gang members have not “taken over” the city.
Police said as of Sept. 20, they do not have any information that leads them to believe the men in the video are in a gang.
Chamberlain said Aurora, like any other city, does have crime and gang activity. The police department said it set up a special task force with local, state, and federal officials to address gang activity.
The police department said it has linked 10 people to the Venezuelan gang Tren de Aragua and eight of those people have been arrested as of Sept. 11. But Chamberlain said there is “a lot of complexity” when identifying suspects as gang members, adding that it has been “a struggle.”
“The one thing I really want to make certain on in this whole discussion is that this is a focus on criminal behavior, this is not a focus on immigration status,” Chamberlain said.
