Question:

How to benefit best from the HELOC draw period?

Answer:

A HELOC draw period can be somewhere between 5 and 10 years and then the loan has to be repaid in full, or scheduled to amortize over the repayment plan. However, during the draw period, you are having the opportunity to only make interest payments. Additionally, you may tap the HELOC funds as many times as you need, or not at all.

At the end of the HELOC draw term, your HELOC is due in full. Sometimes, a HELOC automatically is calculated to amortize over some repayment schedule. If the HELOC is due in a balloon and you do not have the cash, your lender may be willing to convert it into some kind of a fixed rate loan and have it amortized. If they don’t, you will have to find another home equity loan and refinance.

Also, your HELOC lender may be willing to combine your HELOC with your first or second mortgage, so think of talking to them first.

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