HELOC draw period ending? What changes and what to check

What ends with the draw period

During the draw period, you can generally borrow up to your credit limit, and that period often lasts 10 years. When it ends, you generally can no longer take new advances, and the balance moves into repayment. Your agreement states the end date and the repayment terms, so don’t rely on a reminder to find it.

How the payment can change

Some plans allow interest-only payments during the draw period, and others require minimum payments that do not repay the full balance. In repayment, the lender may set a schedule to repay the full balance over a set number of years, so the monthly payment can be much higher. Most HELOCs have a variable rate, so the payment can also change when the rate changes.

Check for a balloon payment

Some plans require the entire remaining balance to be paid at once when the draw period ends, instead of spreading it out. That large amount is called a balloon payment, and you would need to cover it from savings, a new loan, or another source. Because the line is secured by your home, falling behind can put the home at risk. Find out now which structure your plan uses.

• Find the draw period end date in your agreement or statement.
• Confirm whether repayment is in monthly installments or a balloon payment.
• Check the current rate, index, margin, and any rate limits.

Questions to ask before the date

Ask the lender what your first repayment-period payment is expected to be and how it will be calculated. Ask whether the plan can be renewed, whether any of the balance can be converted to a fixed rate, and whether fees apply to closing or keeping the line open. If the new payment may be difficult, contact the lender early and consider talking with a HUD-approved housing counselor about your options.

Keep your HELOC records together

Save the agreement, recent statements, and any notice about the end of the draw period in one place. In Lighthouse, document analysis can read a HELOC statement and keep its balance and rate with your Home Profile. Verify the extracted figures against the lender’s statement before relying on them.