Cash from equity without giving up a good first mortgage: second lien or cash-out refinance
HELOC draw and repayment
The short version
A home equity line usually starts with a draw period, when you can borrow and may pay only interest, followed by a repayment period, when you repay principal and interest. Payments can rise sharply when repayment begins. Read the line's terms for both periods before you borrow a large amount.
Last reviewed against the primary sources listed below.
Read the agreement for
- Length of each period.
- How the rate is set and capped.
- Fees and minimum draws.
Lien questions
What happens when a HELOC draw period ends?
You stop drawing and start repaying principal and interest.
Why can HELOC payments jump?
Because repayment adds principal to the payment.