How much does a $15,000 HELOC cost per month now that rates are cut?

With interest rates on the decline again, the costs of some borrowing products have become more favorable. Rates on both home equity loans and home equity lines of credit (HELOCs), for example, have been dropping consistently for much of 2024. And with another Federal Reserve rate reduction expected for when the Fed meets again on December 17 and December 18 — the third such cut this year — both products are expected to become even cheaper in the final days of the year.

This is a key feature for those owners considering a HELOC. This product has a variable interest rate subject to change monthly based on market conditions. While that was a significant drawback in recent years, it has now morphed into an advantage as rates fall. Still, before acting, homeowners must calculate their potential monthly costs, especially when borrowing from a critical financial asset like their home. This is true whether they're borrowing $150,000 or simply $15,000. 

If you're a homeowner considering the latter amount, then, read on to determine what your monthly payments would look like now that rates are cut.

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How much does a $15,000 HELOC cost per month now that rates are cut?

To determine how much your monthly HELOC payment will be you'll need three factors: the interest rate, the amount of money being borrowed and the length of the repayment period. Here, then, is what a $15,000 HELOC costs per month now that rates were reduced, tied to two common repayment lengths:

• 10-year HELOC at 8.53%: $186.22 per month
• 15-year HELOC at 8.53%: $147.97 per month

For comparison purposes, here's what those payments would have been in January when rates on this product were in the double digits:

• 10-year HELOC at 10.16%: $199.56 per month
• 15-year HELOC at 10.16%: $162.66 per month

So payments have come down by around $15 per month for both. But with the potential for rates to fall further in the weeks and months ahead and a variable rate that will allow HELOC borrowers to capitalize on those changes without having to refinance, it makes sense to secure your funding now.

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Other considerations

While the above payments are what borrowers could be looking at, should they apply for a HELOC now, they're not guaranteed to be identical. The rates above are the average, meaning that qualified borrowers will likely secure a rate close to 8.53% or maybe even lower. 

Home equity borrowers with bad credit, however, will likely pay more. And the above calculations are timely. Should rates go up or down in the upcoming months, the projected payments will adjust, too. So if you're worried about an inability to make your payments should rates rise in the future, a home equity loan with a fixed interest rate may be preferable.

The bottom line

A $15,000 HELOC is now around $15 cheaper per month than it was at the beginning of the year with the potential to become less expensive as additional rate cuts are issued. And while that may not seem like a lot of money saved each month, it could add up to a substantial amount saved over the life of the loan. So, if you can afford the monthly payments, a HELOC may be one of your better borrowing options right now.