HELOC rates are closing in on the 6% range. Here’s what a $20,000 HELOC costs monthly now.

Just above the 6% range.

This is where the average Home Equity Line of Credit (HELOC) interest rate fell this week, the latest in a series of cuts that have now brought rates here to their lowest level since 2022, according to Bankrate data. With an average of just 7.04% right now, qualified homebuyers might be able to find a rate that’s comfortably in the 6% range by shopping around. This allows HELOCs to maintain their status not only Cheapest way to borrow home equity in today’s economy, but also one of the most affordable ways to borrow money in general. With personal loan interest rates over 12% on average and credit card rates over 20%, this makes it one of the most viable options to consider, especially for those looking to borrow a five-figure amount, like $20,000 currently.

And that should be a relatively achievable goal for home equity borrowers, given that, according to a new report, there are about $11 trillion in actionable equity in the country at the moment. So, borrowing $20,000 should be simple for many, and it will leave a comfortable cushion of equity in the home for future borrowing needs. However, your house will be function as a guarantee in this exchange, as would be the case with a home equity loanit is therefore essential that you can afford to make repayments as agreed.

But how much will a $20,000 per month HELOC cost now that rates have dropped further? Below, we’ll look at the numbers homeowners need to know.

Start by seeing how much home equity you could borrow here.

How much will a $20,000 per month HELOC cost now?

Calculating prospective HELOC costs always requires a bit of speculative calculation because the product has a variable interest rate How’s it going change monthly depending on market conditions. But with rates here steadily falling over the past 18 monthsThis presents itself as one of the best variable rate loan products to consider right now.

Here’s how much a $20,000 HELOC will cost monthly at today’s average rate, assuming the entire line of credit is paid off immediately and the interest rate remains constant:

• HELOC of $20,000 over 10 years at 7.04%: $232.63 per month
• HELOC of $20,000 over 15 years at 7.04%: $180.21 per month

For context, here is what a HELOC of this same size costs monthly last springwhile the rates were considerably higher:

• HELOC of $20,000 over 10 years at 7.94%: $242.02 per month
• HELOC of $20,000 over 15 years at 7.94%: $190.44 per month

And here’s what it costs in October 2024just after the Federal Reserve announced its first interest rate cut in several years:

• HELOC of $20,000 over 10 years at 8.94%: $252.70 per month
• HELOC of $20,000 over 15 years at 8.94%: $202.14 per month

Not only have interest rates fallen by almost two percentage points, but monthly payments have decreased significantly as a result. And if you were an existing HELOC borrower, you would have realized these savings independently without having to refinance to one of today’s lowest rates and without having to pay a refinance fee to get one of today’s lowest rates.

However, a product whose rate falls easily can also rise without problem. It is therefore essential to calculate costs in both directions to better ensure affordability in the short and long term.

Learn more about your HELOC options online today.

The essentials

With HELOC rates quickly approaching the 6% interest rate range, it is now cheaper to borrow $20,000 of your home equity with a HELOC than it has been in many years. With payments here ranging from around $180 to $233, this could be the smart, cost-effective way to borrow that much money, assuming you factor in some short- and long-term volatility. Also keep in mind that many lenders will only require interest-only payments during the transition period. HELOC Draw Periodwhich means these payments, at least to start, could be even cheaper if you choose to use this repayment structure instead.

Do you have any other questions? Review your current home equity borrowing options with a lender now.