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If you’re a homeowner looking for a way to access a large amount of money right now, you won’t have to look too far. Thanks to changes in the economy in recent years, the average amount of home equity has soared. Currently, the average amount is $327,000 – up by around $30,000 just since February 2024. And since most lenders allow homeowners to withdraw up to 80% of their equity, that means homeowners are sitting on an average of $214,000 worth of equity to use as they see fit right now.
One effective way to do so is with a home equity loan. This is true if you’re looking to borrow the maximum amount or if you’re looking for a smaller figure like $60,000 to maintain a healthier stake of equity for future use. That’s because home equity loans are relatively inexpensive now that the Federal Reserve is cutting interest rates. And they could become even cheaper if additional rate cuts are issued in November and December, as many are predicting.
Against this backdrop, then, homeowners may want to calculate the monthly costs of a $60,000 home equity loan now that rates have been cut. Below, we’ll do the math.
See what home equity loan rate you could qualify for here.
How much will a $60,000 home equity loan cost per month now that rates are cut?
The average home equity loan interest rate is 8.37% currently. That rate is slightly higher for two common repayment terms: 8.47% for 10-year loans and 8.38% for 15-year loans. Still, those rates are almost half a percentage point lower than they were earlier this year – and they could fall further this month. Here’s what you could expect to pay with a $60,000 home equity loan monthly tied to those two rates and repayment periods:
- 10-year home equity loan at 8.47%: $742.95 per month
- 15-year home equity loan at 8.38%: $586.63 per month
As can be seen, you’ll pay significantly more for the shorter loan than the longer one, even though the latter has the slightly lower rate. While it may then be tempting to instead pursue a home equity line of credit (HELOC), which has a variable rate that could fall as rate cuts are issued, right now HELOCs come with higher rates than home equity loans (8.94%). So you’ll want to weigh the potential for rates to fall further versus what can be locked in right now. In many cases, the lower rate home equity loan will be better for borrowers, especially knowing that they can refinance it to an even lower rate in the future.
Start exploring the best home equity loans available to you now.
The bottom line
A home equity loan offers homeowners a relatively inexpensive way to access large sums of money right now. And, if used for eligible home repairs and renovations, they may be able to deduct the interest they paid on the loan when they file their tax return next year. That said, home equity borrowing comes with inherent risks, so only withdraw an amount that you’re comfortable repaying to the lender or you could be putting your homeownership in jeopardy in the process.