Question:

How is home equity line of credit (HELOC) payment done?

Answer:

Home equity line of credit (HELOC) payment is scheduled usually for 25 years and the first 5 to 10 years are considered the draw period, and the rest will be the repayment period. Due the revolving nature of a HELOC, payment is very flexible and affordable.

Firstly, even if you have a $50,000 home equity line of credit, no interest will be accrued, and you have nothing to repay until you start using it. Even then, during the draw period interest-only payments are due only on the used amount.

Compared to a traditional home equity loan, interest is paid on the whole amount that is borrowed. A home equity line of credit (HELOC) payment is a lot more desirable compared to home equity loan payment.

Sometimes a bank would offer a HELOC with introductory rate lower than the prime. It is going to change in several months, so you should avoid taking a HELOC based on teaser rate.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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