How much does a $125,000 HELOC cost per month now that rates have dropped?

With the recent drop in interest rates, the home equity lending landscape is shifting and more borrowers are turning to home equity lines of credit (HELOCs) as a way to access cash for big projects or other financial needs. HELOCs, which are lines of credit with variable interest rates, were generally seen as a gamble over the last couple of years due to the Fed’s aggressive stance on persistent inflation. That’s because as the Fed raised rates, homeowners with HELOCs saw their rates increase and their monthly payments climb.

But now, with inflation cooling and rates starting to decline, this could be the right time to take out a HELOC. While the variable nature of HELOC rates may have caused concern during the rising rate environment, it may now work to your advantage. After all, the Fed is expected to slash its benchmark rate twice more throughout the remainder of 2024 and into 2025, and if the benchmark rate continues to trend downward, homeowners with HELOCs are likely to see their rates drop in tandem. That, in turn, would make their monthly payments more affordable.

What can borrowers expect to pay each month on a $125,000 HELOC now that rates have dropped, though? And what can they expect to pay if rates continue to drop? Here’s what your monthly payments could look like on a $125,000 HELOC at today’s rates and what they could look like if the Fed drops rates even further over time.

 

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