A variable rate loan product can be risky in environments where interest rates are unstable or trending upward. And that’s been the case for much of the last two years, as surging inflation led to a series of federal funds rate hikes. This caused an increase in mortgage rates, consumer loans, loan secured by real estate And Home Equity Lines of Credit (HELOC) splash. It became especially difficult for those who opened a HELOC, since the rate on this line of credit adjusted monthly.

But the interest rate climate is changing again. The Federal Reserve released its first rate reduction for more than four years when it met in September. More rate cuts are now possible when it meets in November and December. This has made HELOCs a smart alternative for many homeowners right now, thanks to floating rates they come with. And since the average homeowner owns approximately The current net worth is $330,000.A $70,000 line of credit can help cover a variety of major expenses while preserving more of your home equity for potential future use.

Before getting started, however, borrowers should calculate their potential monthly payments. We’ll do the math below.

See how low a HELOC rate you can secure here.

How much is a $70,000/month HELOC worth now that rates have dropped?

average HELOC interest rate now stands at 8.69%. Here’s How Much a $70,000/Month HELOC Would Cost, Pegged to Two Regular repayment periods:

• 10-Year HELOCs at 8.69%: $875.03 per month
• 15-year HELOCs at 8.69%: $697.14 per month

While HELOC rates are unlikely to fall by the same amount as the federal funds rate, it’s helpful for borrowers to know what to expect if they do. Here’s how much a $70,000 per month HELOC could cost if rates drop 25 basis points, as expected in November:

• 10 Year HELOCs at 8.44%: $865.66 per month
• 15 Year HELOC at 8.44%: $686.86 per month

And here’s what they’d be like if HELOC rates fell half a percentage point from today’s average:

• 10 Year HELOCs at 8.19%: $856.34 per month
• 15-year HELOCs at 8.19%: $676.66 per month

So your monthly HELOC payments can now be relatively inexpensive, ranging from $698 to $875 for qualified borrowers. But they are likely to become cheaper as interest rates fall further.

Get started with a HELOC online now.

What about a reverse mortgage?

A reverse mortgage is an alternative to home equity borrowing that many homeowners may want to consider now. With this option, owners receive monthly payments from their lender. These payments reduce the available equity in the home and must be repaid if the owner moves away from the home or dies. But now it can become a valuable way for owners to access their capital.

However, with a few exceptionsReverse mortgages are generally designed for owners age 62 or older. So, if you are younger and need access to this type of financing, a HELOC may be preferable.

Learn more about reverse mortgage options here.

Bottom line

A $70,000 HELOC offers affordable payments now and could potentially become even cheaper in the coming months. However, it’s important to remember that HELOC rates can go down as well as up, so only borrow an amount you’re comfortable paying based on different potential interest rates. And remember that in this scenario, your home is collateral, so you should avoid over-borrowing as you could jeopardize your homeownership if you are unable to repay the entire amount you have withdrawn.