Once the draw period ends, the repayment period begins and typically lasts from 10 to 20 years. It’s possible to make interest-only payments during the draw period. Most HELOCs have a variable interest rate, although some lenders offer fixed interest rates to hedge against future rate hikes. You can borrow from your available equity on demand during the draw period which is usually the first 10 years. HELOCs can have low minimum payments during this time as lenders sometimes only require borrowers to make interest payments. This period of time is known as the HELOC’s draw period and usually lasts 10 years. How Does a HELOC Work?Ī HELOC works much like a credit card in that you can borrow from a HELOC repeatedly as needed for a set number of years. The interest rate can be lower than personal loans or credit cards. A HELOC is a revolving line of credit secured by your home equity that may be used for many purposes including home improvements, paying off high-interest debt or making large purchases.
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