Home Equity Line of Credit (HELOC) can also be referred to as a home equity loan. What to do when your HELOC is approaching maturity is something Bellwether Community Credit Union can help you with.
Home Equity Lines of Credit (HELOCs) are very useful. Actually, a line of credit secured against the equity in your home, a HELOC can help you complete home renovations, or take a dream vacation. But here are some important facts about your HELOC to keep in mind as it nears the end of its term.
Some facts about your HELOC—The "Draw Period"
Most HELOCs require interest-only payments during their term (although you have the option to make payments on the principal as well,) which is usually 10 years. This term is often referred to as the "draw" period, meaning you're able to "(with)draw" funds as you need them, at any time, provided you are making your interest payments regularly.
When the draw period ends, so does your ability to withdraw funds. The end of your draw period also triggers the start of the repayment period. Your monthly payments will now include a repayment amount of the principal, as well as interest on the balance. If you've withdrawn a significant amount of your HELOC funds during the 10-year period, your monthly payments could be considerably higher than what you had been paying each month. Still want access to your funds? Consider refinancing your HELOC.
Options When Nearing the End of Your Draw Period
Here are some steps you can take as your approach the end of your HELOC's term:
- Ensure you know when your draw period ends.
- Review the repayment details and determine if you'd prefer to begin repaying the HELOC, or if you feel it's more convenient to continue to have access to those funds.
- Contact your lender (or Bellwether Community Credit Union—see our number below) to discuss your HELOC and get further advice on repayment or refinancing.
Did you know…
Bellwether can refinance your HELOC even if it's with another lender? We can help you choose the best option for refinancing your HELOC to meet your family's financial needs. Contact us to explore the possibilities—603-645-8181.
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