 TITLE: What Is a Draw Period on a HELOC? CONTENT: How Do HELOC Draw Periods Work?\n-------------------------------\nMost HELOCs give you a 10-year draw period in which to use the money. During this time, you can draw as much as you need up to your total available credit line. When the draw period ends, you'll have to repay the amount you drew. For example, if you get a $100,000 HELOC and only draw $20,000, you will only have to pay back the $20,000 plus interest, not the full $100,000 you could have drawn.\nSome HELOCs require you to draw a minimum amount of funds upfront; others do not. To draw from your HELOC funds, you can use a debit card, write a check, get cash from a bank branch or ATM, or electronically transfer the money into your bank account.\nDuring the draw period, your monthly HELOC payments are minimal; typically, you'll only have to pay the interest on the amount you've borrowed. Depending on your loan terms, you may be able to make payments on the loan principal as well or even pay the loan off in full (although some lenders charge a fee if you repay the loan early).\nWhen the draw period ends, your HELOC closes. You then repay the balance of the loan, generally over 20 years, or refinance to a new loan (more on that in a moment). Some HELOCs have a balloon repayment plan, meaning the entire balance—loan principal and interest—is due at the end of the draw period.\nWhat if you miss a payment during either the draw period or the repayment period? There's generally a grace period after the HELOC payment due date. If you pay within this grace period, you may be charged a late fee or other penalty, but the lender won't report the late payment to the credit bureaus, so it won't affect your credit score. If you make the payment after the grace period has passed, or don't make it at all, the lender will report the missed payment to the credit bureaus, likely hurting your credit score. Check the terms of your loan agreement to verify what your grace period is. END