Different options may help you lower your interest rate, lower your monthly payment, or pay off your outstanding balance.Talk with a home equity specialist to learn more. Refinancing may not be right for your situation.Refinance to a new first mortgage with Wells Fargo, which lets you refinance your home equity line of credit into a new Wells Fargo home mortgage.This program transfers the entire outstanding balance into its repayment phase early, and ends access to new home equity funds. The monthly payments are designed to pay off the balance by the end of the new term. Use our Early Paydown Program SM, which gives qualified borrowers the ability to convert your variable-rate home equity line of credit balance into a fixed rate and fixed term before the end of draw date.Some of these options may not be available to you.įor home equity lines of credit at end of draw or end of term: The chart shown is for illustrative purposes only and is not based on the actual terms of your accountĮach person’s situation is unique, and lines of credit vary. The chart below shows how much an interest-only payment during the draw period would be for different loan amounts, and how it increases when principal-and-interest payments begin.įor example, on a $50,000 outstanding balance, the interest-only payment at 4.25% would be $177 monthly, while the interest-and-principal payment at the adjusted rate of 5.85% would be $295. Some home equity lines of credit feature a balloon payment, when you pay the outstanding balance (plus interest and any additional fees or charges) in one lump sum. With an interest-only plan, your principal balance is reduced only when you make voluntary principal payments during the interest-only period. The combination may increase your monthly payments substantially, especially if you made interest-only payments during the draw period. The interest rate may change from a variable rate during the draw period to a fixed rate during the repayment period. Most lines of credit have a 10-, 15-, or 20-year draw period and then move into the repayment period, when you’ll repay your outstanding balance with full principal-and-interest payments. Now that the term has ended, the outstanding balance is due in full, and a substantial lump-sum balloon payment may be required.įor a home equity line of credit, end of draw is the point at which you can no longer access funds. Your monthly payments may increase substantially – especially if you made interest-only payments during the draw period – because you will now be paying back a portion of your principal along with interest with each payment.ĭuring the draw period, you may have made interest-only payments and had a variable interest rate. The variable interest rate may change to a fixed rate during the repayment period. When the repayment period begins, you’ll need to make principal-and-interest payments to repay your principal balance within a specific time frame. You may have had a variable interest rate. The 2 main types of home equity lines of credit are paid off differently:ĭuring the draw period, you may have made interest-only payments or principal-and-interest payments. When you reach the end of the draw period, you can no longer access additional funds, and repayment begins. During the term, you can use – or draw – the funds, as needed. A home equity line of credit makes a specific amount of money available to you for a set period or term, which typically lasts for 10 – 20 years.
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