How much would a $60,000 home equity loan cost per month?
Whether you need to pay for a costly medical procedure or are thinking about using your home equity as a down payment on a second home, you may be thinking about tapping into $60,000 worth of your home's equity soon. But before you borrow against your home equity, it's important to make sure you can afford the payments.
After all, when you take out a home equity loan, your home is used as collateral. And, if you're unable to afford the payments and default on the loan, you could put your home in jeopardy. So how much would your monthly payments be if you take out a $60,000 home equity loan?
Compare leading home equity loan options today.
How much would a $60,000 home equity loan cost per month?
When you take out a home equity loan, factors like the amount of money you borrow, your term, your interest rate and how the interest can impact the cost of your monthly payments.
Home equity loan terms typically range from five to 30 years, with 10- and 15-year terms being some of the most common. The average interest rate for a 10-year home equity loan is currently 8.76%, and the average rate for a 15-year home equity loan is currently 8.74%.
Here's what you can expect to pay each month based on the above loan terms and rates:
- 10-year home equity loan: If you take out a $60,000, 10-year home equity loan at an 8.76% interest rate, you would pay $752.28 per month and the total interest paid would be $30,274 over the life of the loan.
- 15-year home equity loan: If you borrowed $60,000 with a 15-year home equity loan at an 8.74% interest rate, you would pay $599.31 per month and $47,876.68 in total interest over the life of the loan.
A home equity loan isn't the only way you can access $60,000 worth of home equity, though. Home equity lines of credit (HELOCs) are another option to consider, but interest rates on these credit lines are variable, your monthly HELOC payment could change periodically if rates shift.
But if your HELOC rate and payment stayed the same through the 15-year repayment period, your HELOC payments on a $60,000 balance at today's average interest rate of 9.18% would be $615 per month and you would pay $50,700.25 in total interest.
Get the money you need with a home equity loan now.
How to get a low-rate home equity loan now
If you want to find a low-rate or lower-cost home equity loan, the following strategies could come in handy:
Shop around
Financial institutions compete with one another for your business, and one way they do that is to offer different rates on home equity borrowing products. In turn, some lenders will have lower rates than others, so it's important to shop around.
"You should compare rates before you choose one," explains Alex Blackwood, CEO and co-founder of Mogul Club, a real estate investing platform. "Look up lenders that provide home equity loans and pull indicative rates from a number of them, so you can ensure you're getting the best rate possible."
Improve your credit
"Lenders check your credit score to determine how large of a loan and how low of a rate they'll offer, so it's important to keep your credit score as strong as possible before applying for the loan," says Blackwood.
So, you may want to focus on improving your credit before you apply. Even small improvements to your credit score can make a meaningful difference in your monthly payments and overall cost.
Borrow less
While borrowing less money may not impact your rate directly, it could impact the costs each month. For example, the more you borrow, the higher you can expect your home equity loan payments to be. So, you may want to only borrow what you need to keep your loan costs to a minimum.
Find out how affordable your home equity loan could be today.
The bottom line
At today's average rates, you can expect to pay between $599.31 and $752.28 per month on a $60,000 home equity loan. However, the rate you get depends on a range of factors, and in certain cases, it may be possible to find even lower rates than the average. To do so, consider shopping around, working to improve your credit score or borrowing less to make your home equity loan more affordable. Compare your home equity loan options now.
