$50,000 home equity loan vs. $50,000 HELOC: Which is cheaper now, post-Fed rate cut?
If you're a homeowner looking to borrow $50,000 currently, you may not have to look very far to find it.
With home equity levels rising to a new record high in recent months, one of the simpler ways to borrow money is right under your own roof via your accumulated home equity. And if you do so with a home equity loan or a home equity line of credit (HELOC), you can borrow with an interest rate materially lower than what accompanies a personal loan or credit card. After the Federal Reserve issued its first interest rate cut of 2025 last week, both are even more affordable for homeowners now.
But more affordable doesn't mean identical. Home equity loans and HELOCs operate in similar but different ways and, accordingly, come with different interest rates and considerations for homeowners. Between a $50,000 home equity loan and a $50,000 HELOC, then, which is cheaper now, after the Fed's September rate cut? That's what we'll calculate below.
See how low your current HELOC and home equity loan rate offers are here.
$50,000 home equity loan vs. $50,000 HELOC: Which is cheaper now, post-Fed rate cut?
While the monthly payments required on an amount of this type with either a home equity loan or HELOC will be similar, it's important to note two big differences. With a HELOC, the interest rate is variable, meaning that it will change each month based on market conditions. That's a major advantage now, thanks to the cooling rate climate, but it can be detrimental when and if rates reverse course. Also, with a HELOC, interest-only payments are generally required during the draw period, before interest and principal payments are mandated in the repayment period.
Here, then, is what payments on both look like now, post-Fed rate cut, assuming rates on the HELOC remain unchanged and that full repayments begin immediately:
$50,000 home equity loans:
- 10-year home equity loan at 8.43%: $618.06 per month
- 15-year home equity loan at 8.31%: $486.82 per month
$50,000 HELOCs:
- 10-year HELOC at 8.05%: $607.96 per month
- 15-year HELOC at 8.05%: $479.27 per month
Right now, a $50,000 HELOC over 10 years is about $10 cheaper monthly, while it's around $7 cheaper monthly for a 15-year option. That cost differential, however, needs to be weighed carefully, as home equity loan rates are fixed, changing only when refinanced, while HELOC rates will change much more often, especially over an extended period. Consider both, then, and understand your budget and realistic ability to weather rate changes ahead before choosing either option.
Learn more about your current home equity loan and HELOC offers here.
What about cash-out refinancing?
Those homeowners who have seen their home values surge in recent years may be tempted to forego their home equity loan and HELOC options and instead elect for a cash-out refinance. This occurs when homeowners secure a new loan larger than their current mortgage balance. They then use the former to pay off the latter, preserving the difference between the two as cash for themselves. T
he issue with this now? It will require exchanging your current mortgage rate for one of today's instead. And if you have a rate under 6%, that means paying more than you already are. Crunch the numbers closely, then, to determine if this is really better than a home equity loan or HELOC, or if it just seems that way.
The bottom line
Right now, a $50,000 HELOC is slightly less expensive than a $50,000 home equity loan. But "right now" isn't permanent, especially for variable-rate products. While your home equity still offers one of the most cost-effective ways to borrow, especially for larger five- and six-figure sums, you'll need to weigh the repayment structure of each carefully. By doing so, you'll make a better borrowing decision not only for the time being, but for the future, as well.
