Understanding the Monthly Cost of a $70,000 Home Equity Line of Credit in 2025
Over the past few years, home equity lines of credit (HELOCs) have emerged as an attractive borrowing option for homeowners, particularly as home values and equity have seen significant growth. As of late 2024, the average equity in homes was around $319,000, offering homeowners a substantial resource for financial needs, debt consolidation, or expense management.
If you're considering a HELOC, it's beneficial to understand the associated monthly costs. We will clarify the monthly cost of a $70,000 HELOC.
The monthly payment for a HELOC is subject to fluctuations as it uses a variable interest rate, which lenders typically revise each month. Therefore, the interest rate you have in one month may not be the same the next. However, HELOC rates hovered around 8.28% in mid-February.
Historically, from February to October of the previous year, HELOC rates were consistently above home equity loan rates. However, by October, HELOC rates began to decrease. If you had taken a HELOC in late October, your rate would have been around 8.69%.
The variation in monthly costs of a $70,000 HELOC between October 2024 and February 2025 highlights the unpredictable nature of variable-rate products. Interest rates can be hard to predict, and while some homeowners might benefit from waiting for lower rates, others might end up paying higher rates due to delays.
According to Michael Gifford, CEO of home equity firm Splitero, HELOC rates are influenced by the Federal Reserve's decisions to cut or hike interest rates. While lower rates are beneficial, higher rates can put homeowners in a challenging situation.
One advantage of a HELOC is its relatively lower rates compared to other products like personal loans. For instance, the average personal loan rate stands at 12.38%, which is more than four percentage points higher than the average HELOC rate of 8.28%. Although personal loans offer a maximum repayment term of seven years, the shorter term and higher interest rate result in a considerably higher monthly cost than a HELOC.
However, it's crucial to note that while personal loans are unsecured, a HELOC requires using your home as collateral. Failing to make HELOC payments could risk your home being seized by the lender.
In summary, a $70,000 HELOC can be an affordable way to leverage your home equity for various financial needs. With current interest rates around 8.30%, now could be an ideal time to consider this option, especially since HELOC rates are generally lower than personal loan rates.