Home Equity Resets Looming
Is Your HELOC Draw Period Coming to an End?
Did you know that HELOCs and other home equity loans have an end date to their draw period? 10-15 years after issuance, these loans covert into amortizing loans, meaning your payment could double or triple, depending upon current interest rates.
What Happens to the Payment?
HELOCs come with a convenient interest-only payment option, but when the draw period ends, often 10 years from issuance, the borrower can no longer make withdrawals, and the HELOC becomes fully amortized. Instead of the minimal interest-only payments, the outstanding balance might be amortized over a period of 20 years, and the payments increase dramatically.
If you have a Home Equity Line of Credit, you’ll want to pay attention to the term and see if higher payments might be on the horizon. Read the full article in RealtyTrac.