With the average homeowner having around $330,000 worth of home equity to utilize right now, now may be a smart time to explore your home equity borrowing options. One of the best ways to access this equity in today’s evolving rate climate is with a home equity line of credit (HELOC). This product works like a credit card does, just with your home equity as the funding source. And it comes with an interest rate significantly lower than credit cards and personal loans do right now. HELOCs could become even cheaper, too, thanks to their variable rate nature. As interest rate cuts are issued, HELOC rates will fall independently, too. 

If you’re considering using your home equity, then, it makes sense to explore your HELOC options. When you do, however, you should carefully consider the potential costs. A $90,000 HELOC could provide homeowners a sizable funding source while still allowing them to maintain a healthy portion of equity for potential use in the future. But how much does a $90,000 HELOC cost per month now that rates are cut? That’s what we’ll calculate below.

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

How much does a $90,000 HELOC cost per month now that rates are cut?

HELOC interest rates change monthly, making potential payments difficult to predict. The average rate as of October 9 is 8.94%. Here’s what monthly payments would look like at that rate, tied to two common repayment periods:

• 10-year HELOC at 8.94%: $1,137.16 per month
• 15-year HELOC at 8.94%: $909.63 per month

While no one knows where interest rates are heading precisely, it’s critical to calculate your payments for the future, too. Here’s what they’d look like if today’s current HELOC rates drop by 25 basis points:

• 10-year HELOC at 8.69%: $1,125.04 per month
• 15-year HELOC at 8.69%: $896.32 per month

And here’s what they would be if rates drop half a percentage point from where they currently are:

• 10-year HELOC at 8.44%: $1,112.99 per month 
• 15-year HELOC at 8.44%: $883.10 per month 

So not only does a $90,000 HELOC come with relatively inexpensive monthly payments now, but they’ll become even cheaper as rates decline. And you won’t need to refinance (or pay to refinance) to secure that lower rate as the HELOC will adjust automatically.

Get started with a HELOC here now.

What about home equity loans?

Home equity loans are also worth exploring, particularly considering the lower, fixed 8.37% rate they have currently. A $90,000 home equity loan comes with slightly lower monthly payments now. But as rates decline borrowers will be stuck with the original rate they opened the account with, unlike a HELOC which will inherently fall on its own. So you’ll need to weigh that scenario carefully to better determine if a home equity loan or HELOC is best for your financial situation now.

The bottom line

A $90,000 HELOC comes with monthly payments between $910 and $1,138 now – and those payments could fall in the months to come. Just remember that HELOC rates can decline as easily as they can rise, so be prepared for either scenario. And only withdraw an amount of equity that you can easily afford to repay, no matter whether rates drop or fall during the repayment period, as your home serves as collateral and you could jeopardize your homeownership if you fail to pay all that you’ve withdrawn.