 TITLE: What Is a Draw Period on a HELOC? CONTENT: What to Do Before a HELOC Draw Period Ends\n------------------------------------------\nTo avoid unpleasant surprises, make sure you understand your HELOC's terms and exactly when the draw period ends. Once the HELOC closes, you can no longer draw from it—and you'll start making larger loan payments.\nAs you approach the end of your draw period, confirm the balance you will owe after the HELOC closes, how long your repayment period lasts, and what your monthly payments will be. If you have a variable-rate HELOC, your payments could change during the course of repayment as your interest rate fluctuates; however, most HELOCs cap how much the interest rate can rise at one time and over the loan term.\nIf you need to reduce your monthly payments, the time to explore your options is well before the draw period expires. For example, many lenders will let you convert a variable-rate HELOC to a fixed-rate HELOC, but you must do so before the draw period ends.\nPaying back at least some of the principal during the draw period reduces the total amount you will owe when the HELOC closes. If you pay it all back, you'll have a zero balance at the end of the draw period. In this case, your loan will close—generally with no further payments or action required on your part.\nIf you didn't make principal payments during the draw period, be prepared for a substantial increase in payments after the HELOC closes. Often, borrowers find their payments more than double compared with the interest-only payments they were making during the draw period. Remember, your home serves as collateral for the HELOC—so unless you can cover the loan payments, you could lose your home. END