Before You Open a HELOC, Understand This Timeline

A HELOC can feel a little like a credit card secured by your home - but there's one important difference: the borrowing period does not stay open forever.

With a HELOC, you usually have what's called a draw period. That's the window of time when you can borrow from the line of credit, pay it down, and borrow again, up to your approved limit.

But that draw period is fixed. Depending on the lender and the product, it might be only a few years, or it might be as long as ten years. So before opening a HELOC, it's important to think about how long you may actually need access to those funds.

There's another timeline issue, too. During the draw period, payments are often interest-only. That can make the payment feel small and manageable at first, but it also means you're not reducing the balance.

When the draw period ends, the repayment period begins. At that point, you're paying both interest and principal - and because the repayment timeline is shorter, the payment can increase significantly.

For example, with a 20-year HELOC that has a 10-year draw period, the balance has to be repaid over the remaining 10 years. The payment could be almost twice what it was during the draw period.

So the takeaway is this: don't just ask, "How much can I borrow?" Ask, "How long can I access the money, and what happens when repayment begins?"

And remember - it's always okay to ask. We're here to help you get home.