Here’s what a $70,000 home equity loan costs monthly now that rates are falling

Searching for a way to secure a five-figure sum of cash is often difficult, but it’s been especially so in recent years. As inflation soared, interest rates rose in tandem. That caused credit card rates to surge to a near-record 23%, where they are currently. Personal loan rates also rose and are close to 13% now. Both products also come with inherent maximum limits, depending on the lender and the borrower’s profile.

Fortunately, homeowners have a cost-effective way to access a large sum of money via their home equity. With a home equity loan, owners can easily secure a sum of $70,000 or more and they can do so at a significantly lower interest rate than most popular alternatives. And with rates on the decline, this unique borrowing product could become even cheaper soon. It’s critical to calculate these potential monthly costs in advance, however, as your home serves as the collateral in these circumstances. 

So, what would a $70,000 home equity loan cost monthly now that rates are falling? That’s what we’ll calculate below.

See what home equity loan rate you could secure here now.

Here’s what a $70,000 home equity loan costs monthly now that rates are falling

The average home equity loan rate is 8.37% as of October 9, but it’s slightly higher when tied to two common repayment periods. Here’s what borrowers could expect to pay monthly for a $70,000 home equity loan if they open one now:

• 10-year home equity loan at 8.47%: $866.78 per month
• 15-year home equity loan at 8.38%: $684.40 per month

So while your payments on a 15-year home equity loan will be almost $200 cheaper per month, you’ll get stuck making an extra five years’ worth of payments compared to the shorter term. Plus, the 15-year home equity loan comes with an interest total of $53,192.49 while the 10-year loan has a total of $34,013.25 – a difference of approximately $19,180 saved. Weigh the monthly lower payments versus the total savings, then, to better determine which option is better for your financial situation.

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Should you wait for interest rates to fall further?

It may be tempting to wait for home equity loan interest rates to fall further to lock in an even lower rate, but that could be risky. There’s no guarantee that rates will be cut. And even if the Fed issues two 25 basis point cuts, home equity loan rates are unlikely to fall by that exact amount as lenders start pricing in these presumed rate reductions in advance. 

Finally, a 25 basis point cut (or two) is only likely to have a negligible effect on home equity loans compared to what they are currently. For many, it may be better to lock in a rate now and look to refinance at some later point when rates are materially lower than they are today.

The bottom line

A $70,000 home equity loan comes with payments ranging between $867 and $685 monthly for qualified borrowers. While those payments could become even cheaper as rates drop, they’re unlikely to become so much more affordable that it’s worth waiting to act. Instead, borrowers should start calculating their potential costs now and begin shopping around for lenders to find a home equity loan with the best rates and terms. And remember that the lowest rates will be reserved for borrowers with the highest credit scores, so make sure your credit is in top shape before applying for a loan.