What does the repayment period of a US home equity loan (HELOC) mean? What preparations can be made before entering the repayment period?

Other repayment methods during the repayment period

With a HELOC loan, the ideal situation is to pay off the money during the withdrawal period, so that you don’t need to repay when the repayment period comes. If your personal budget does not allow this operation, and you are worried about the increased pressure during the repayment period, you can consider other repayment methods⬇️

1. Refinance another HELOC

If the homeowner has a good credit score, he or she can use the withdrawal period of the new HELOC to repay the loan when the first HELOC enters the repayment period. Of course, you must ensure that you can repay the loan when the second HELOC enters the repayment period.

2. Refinance another home equity loan

Note! The home equity loan mentioned here is a home equity loan, not a HELOC. Home equity loans and HELOC are both home equity loans, but the form is slightly different. Home equity loans are direct loans of a large amount of money, and then repayments are made monthly, unlike HELOC, which has two stages: withdrawal and repayment. Homeowners can use home equity loans to pay off the remaining HELOC loan first, and then repay the home equity loan monthly.

3. Cash-out Refinance

Cash refinancing is to replace one’s original mortgage with a new loan with a larger loan amount than the original balance. At this time, the extra loan amount can be withdrawn. Mortgage interest rates are usually lower than home equity loan interest rates. In addition, if the mortgage interest rate is even lower than the original interest rate during refinancing, the homeowner can save some money. However, it should be noted that refinancing has costs and sometimes it may not be cost-effective.