Here's what an $80,000 home equity loan costs per month now that rates are falling

Homeowners in need of extra cash may be tempted to turn to popular options like credit cards and personal loans to make ends meet, especially now, with the repercussions of inflation and higher interest rates still being felt. But instead of pursuing these high-rate alternatives, many would be better served by accessing money that they already have via their home equity. With a home equity loan, specifically, homeowners can potentially tap into hundreds of thousands of dollars (the average homeowner currently has approximately $330,000 in equity). And they can do so at an interest rate far lower than that which accompanies personal loans (average of 13%) and credit cards (nearing a record 23%).

Before pursuing this option, however, it makes sense to first calculate the potential costs, especially now that the Federal Reserve has started cutting interest rates – and is hinting at additional reductions to come later in the year. A home equity loan for $80,000 could provide borrowers the money they need while still maintaining a healthy portion of their equity to potentially use in the future. But what will an $80,000 home equity loan cost per month now that rates are falling? That's what we'll calculate below.

See what home equity loan rate you could qualify for here.

How much does an $80,000 home equity loan cost monthly now that rates are falling?

The average home equity loan interest rate as of October 4 is 8.37%. That rate is slightly higher, however, when tied to two common repayment terms. Here's what qualified borrowers can expect to pay monthly for both:

• 10-year fixed home equity loan rate at 8.47%: $990.60 per month
• 15-year fixed home equity loan rate at 8.38%: $782.17 per month

While you'll pay more than $200 per month with the shorter term, you'll also have the loan paid off five years earlier than if you had gone with the longer, lower rate 15-year term. So crunch the numbers before acting so you can better determine which one is more affordable for your financial circumstances, both now and over the full repayment period.

Start exploring your current home equity loan options online today.

Other considerations

While the above home equity loan rates are what's currently available, it's critical to remember that these rates change often and can and likely will fall again as additional rate cuts are issued. So borrowers will want to weigh the costs of waiting versus what can be locked in right now. It's also important to remember that these low rates and terms will only be provided to those homeowners with the highest credit scores. So, if your credit needs some repair, it may make sense to first spend the time boosting your score to better position yourself for lower offers in the future. With a little luck, you can improve your score now and then open a home equity loan at a lower rate later this year.

The bottom line

An $80,000 home equity loan will cost qualified borrowers somewhere between $783 and $991 per month right now. But if you don't have a great credit score, it could cost significantly more. So make sure your credit is in top shape before applying. And be sure to only withdraw as much as you feel comfortable repaying, whether it's $80,000 or a smaller amount. If you can't repay all that you've withdrawn you could risk your home as it serves as collateral in these borrowing circumstances.