I really like the fact that I received a great interest rate on my home equity line of credit (HELOC), but I was happier still once I started using a HELOC payment calculator. You see, when I signed the loan documents for my HELOC, I was approved for the standard variable rate repayment structure. This can be a pretty good thing as long as the prime lending rate stays low. A low prime lending rate is key for me because my variable rate loan is the prime rate plus 3 points. Of course the prime rate changes daily so my monthly billing statement from my lender was always a little bit of a surprise in terms of the amount due. Well, having a HELOC payment calculator has taken all of the guesswork out of it for me.
HELOC repayment calculation
If, like me, you’re not a whiz at math you will quickly appreciate the advantages of a HELOC payment calculator. Essentially, when you have a variable interest rate (which is the most common type of HELOC repayment structure), the payment is calculated in this manner:
For a HELOC that has say, a 5 percent interest rate, you would calculate the interest for a day by dividing .05 by 365 which is going to give you 0.0001369 which then gets multiplied by the average daily balance during the month. So if your balance is $250,000, then the interest payment during that month is $34.23. Ok, are you starting to see the advantage of a HELOC payment calculator yet?
HELOC payment calculators
Now that I’ve demonstrated the wisdom of having a HELOC payment calculator, I’m certain you will want this tool in your financial arsenal. A number of home equity calculators are available and some will function in a similar manner to any HELOC payment calculator, so stay informed and if you have a variable rate HELOC, use a HELOC payment calculator!