While HELOC rates are unlikely to fall by the precise amount the federal funds rate will, it's helpful for borrowers to know what to expect if they do. Here, then, is what a $70,000 HELOC can cost monthly if rates drop by 25 basis points, as expected in November:

At today’s average HELOC rate of 8.88%, which assumes an 80% LTV, borrowing $100,000 on a 10-year repayment term equates to a $1,260.43 monthly payment. (Our calculation accounts for a 10-year draw period with interest-only payments.)

Home equity loans and home equity lines of credit (HELOCs) allow homeowners to tap into the value of their homes. A home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home’s value and pay that amount back in monthly installments.

Fixed-rate HELOCs are a good option for many homeowners — but consider the current rate environment beforehand.

What are the key differences between a HECM and a HELOC? Industry educator Dan Hultquist breaks it down, along with a monthly rate update.