A home equity line of credit is a powerful financial tool. Borrowers obtain money by using their homes as collateral. During a HELOC draw period, the borrower has control. They do not have to utilize the full availability if they don’t want to. 

HELOCs help because the interest rates are usually lower than credit cards. You can fund things such as medical expenses, home renovations, or even college expenses. By unlocking your home’s value, you can reach your financial goals.

Can you pay off your balance during the HELOC draw period?

With a standard term, you make monthly payments toward the principal balance and accrued interest. You would continue making scheduled payments until the balance is zero. Repayment periods vary based on the details of your agreement but typically last 10 to 20 years. Fortunately, most lenders will allow you to pay off your balance early, even during the HELOC draw period. 

What if I never use my HELOC?

A HELOC is worth it when used to improve the value of your home. Additionally, they provide financial opportunities if you don’t have an emergency fund. However, if you open a HELOC without using it, here are some things to consider:

– What is the annual fee?
– Do you want to sell your home? (You cannot put it on the market with an open HELOC.)
– Is there a required balance?
– What is the minimum draw amount?

Not all lenders are the same. With a home equity line of credit through Achieva Credit Union, we pay up to $650 on closing costs¹. Furthermore, there are zero annual or transaction fees. Click here to learn about our special HELOC promotions and lower rates.

After the HELOC draw period, can you refinance?

The answer is yes! Keeping track of your HELOC draw period will help you determine if refinancing is a good move. Sometimes the market changes, and if you can get a lower rate, you should. The key is to understand the total amount you owe on both principal and interest.

A HELOC is just one of many solutions available for homeowners. Before using your home’s equity, make sure to do your homework. If you have further questions, call our member service center at 800.593.2274. We’ll be glad to answer inquires regarding home equity lines of credit and explain their benefits.

 

 

---

¹APR=Annual Percentage Rate. The variable APR for a Home Equity Line of Credit is the lowest available and is the introductory APR for the first 6 months. Your qualified APR for the initial 6 months and beyond is determined by various factors and will be disclosed to you at final approval. At this time the fixed margin may vary from .0 to +4.75% over the variable index (Prime Rate as published in the Wall Street Journal on the 15th day of the prior month). After the initial 6 months, your qualified APR may adjust up or down based on the movement of the Index but never more frequently than every 6 months and is limited to a maximum of 1% for each occurrence. The APR will never be lower than 7.25% and can never increase more than 6% over your qualified APR (maximum 18%). Interest rate adjustments may result in an increase in your payment amount and loan term. Closing Cost Fees up to $650.00 will be paid by the Credit Union (excluding full appraisal) with an advance of at least $10,000 on the day of disbursement (repayment of ACU debt excluded). Achieva offers this benefit up to two times per property. Property insurance is required. Minimum loan amount is $10,000. Click for current home equity rate or call 800.593.2274 for more details.