Is a $90,000 HELOC or home equity loan cheaper now?

For borrowers looking for a large sum of money right now, there are few options worth considering. Credit cards have limits that prevent many borrowers from getting a credit line worth $90,000 or more, for example. And they have interest rates nearing a record 23% currently. Personal loans, on the other hand, have interest rates averaging nearly 13% and they come with limits that could prevent many from borrowing that large of an amount.

Home equity loans and home equity lines of credit (HELOCs), however, come with both lower interest rates and more flexibility. With the average home equity amount currently sitting at around $330,000, a $90,000 withdrawal will still allow borrowers to maintain a healthy portion of equity for future use. That said, the interest rate climate is evolving again after the Federal Reserve issued an interest rate cut in September. Additional cuts are expected for when the Fed meets again in November and December, too. 

Understanding this dynamic, then, it behooves savers to calculate their potential home equity borrowing costs. But is a $90,000 HELOC or home equity loan cheaper now? That’s what we’ll calculate below.

See how low of a home equity loan rate you could lock in here.

Is a $90,000 HELOC or home equity loan cheaper now?

In short: A $90,000 home equity loan is cheaper than a $90,000 HELOC right now. But that’s as of October 10. That could easily change in the weeks and months ahead. That’s because HELOCs have variable rates, subject to change as the rate climate does, while home equity loans have fixed rates that will remain the same unless refinanced. So the “lower” home equity loan rate you lock in this month could be the “higher” option when compared to the prevailing HELOC rate of November or December 2024. 

Still, right now, if you’re looking for the lowest monthly payments, a home equity loan is the better choice. Here’s what your monthly home equity loan payments would be if opened now, tied to two common repayment periods:

• 10-year home equity loan at 8.46%: $1,113.95 per month 
• 15-year home equity loan at 8.37%: $879.42 per month

And here’s what it would be over those same two repayment periods with a HELOC, assuming the rate remains constant:

• 10-year HELOC at 8.73%: $1,126.97 per month
• 15-year HELOC at 8.73%: $898.44 per month

While home equity loans are around $10 to $15 cheaper each month now, that could soon change. At the same time, HELOC rates can rise as easily as they can fall (they change monthly), so you’ll want to weigh that inherent risk versus the cheaper rate that can be locked now. It’s not an easy decision to make so do your math – and research – before applying.

Learn more about your home equity loan and HELOC options online today.

What about the alternatives?

There are additional ways to withdraw home equity besides just with a home equity loan or HELOC, but the alternatives are arguably less beneficial. Cash-out refinancing requires homeowners to take out a new, larger mortgage loan to pay off their old one so that they can then take the difference in cash. That requires exchanging your current mortgage interest rate for a likely higher one, however, which can negate the benefits of this strategy. Reverse mortgages, meanwhile, are only for homeowners aged 62 and older. And other eligibility requirements further limit the pool of eligible homeowners. Compared to these options, then, a home equity loan or HELOC could be better for your circumstances.

The bottom line

Right now, a $90,000 home equity loan is slightly cheaper than a $90,000 HELOC. But that could soon change if additional interest rate cuts are issued. So monitor the market daily for opportunities to act but don’t wait too long, either. It’s difficult to predict with certainty what will happen to interest rates long-term and your current financial needs may not be able to wait much longer.

Have more questions? Learn more about your home equity borrowing options here.