If you’re a homeowner who has seen your home value surge in recent years, you’re not alone. Cumulative home equity levels in the country hit a record high earlier this year, rising to a record $17.8 trillion. With the average homeowner in possession of around $300,000 worth of home equity now, this is likely a plentiful financing source for millions.But plentiful doesn’t mean that all of the money can be used.Lenders typically cap the amount of equity that can be borrowed at 80%. So, if you have $100,000 in equity, you’ll need to keep $20,000 as a buffer. Borrowing $75,000 out of that average $300,000, however, will allow you to keep 75% of your equity untouched. And it can be particularly smart to borrow this money with a home equity line of credit (HELOC) now.HELOC interest rates have declined by more than two full percentage points over the last year, approximately, making it one of the most affordable ways to borrow money right now. Thanks to the product’s variable interest rate that responds to market conditions, it could soon become even more affordable, too, if the string of recent Federal Reserve interest rate cuts continues. But with a Fed rate cut issued at the end of October, which followed one in September, costs here may already be low enough to justify taking action. So, how much does a $75,000 HELOC cost monthly now, after the October Fed rate cut? That’s what we’ll calculate below.See how much home equity you could borrow with a HELOC here now.How much does a $75,000 HELOC cost monthly after the October Fed rate cut?Determining the exact monthly HELOC repayment costs, no matter the amount, can be difficult to do with precision, thanks to the variable rate. Prospective borrowers are encouraged to calculate their costs against a series of realistic rates, then, to better determine affordability. Here’s how much a $75,000 HELOC costs monthly now, after the October Fed rate cut, calculated against today’s average HELOC rate, two repayment periods and the assumption that the rate will remain constant:10-year HELOC at 7.81%: $902.44 per month15-year HELOC at 7.81%: $708.54 per monthFor context, here’s what a HELOC of this same size cost in early October, following the Fed’s September interest rate cut:10-year HELOC at 7.89%: $905.60 per month15-year HELOC at 7.89%: $711.98 per monthAnd here’s what it cost in March, when rates were even higher:10-year HELOC at 8.12%: $914.7215-year HELOC at 8.12%: $721.94So, monthly payments here are down around $12 to $13 compared to what they were earlier this year, offering small but noticeable savings for borrowers. And borrowers who took out a HELOC earlier this year wouldn’t have to take any action or pay to refinance to these lower rates, as they would with a home equity loan, as rates here adjust independently monthly. That makes now a smart time to consider this unique home equity borrowing tool.Get started with a HELOC now.The bottom lineA $75,000 HELOC now comes with monthly payments ranging between $709 and $902 for qualified borrowers. And those calculations are made on the assumption that the full line of credit is utilized immediately. Considering that many borrowers won’t quickly use the full HELOC and that most HELOC lenders mandate just interest-only payments during the initial draw period, payments here could be even cheaper, depending on your intended use. So take the time to shop around to compare rates, terms and lenders now. Following the recent Fed rate cuts, a HELOC could be your preferred (and affordable) borrowing tool.
