What Does it Mean When a Home Loan Has a Draw Period?
During a home loan's draw period, you usually only pay interest.
When you qualify for a home equity line of credit, or HELOC, you'll usually be given a multi-year draw period for it. Draw period lengths themselves vary depending on the loan terms of any particular HELOC. After the end of your HELOC's draw period, you become responsible for making payments on it. During a HELOC's draw period borrowers generally only have to make interest, not principal, payments on the money drawn from them.
Draw Period Expiration
Once your HELOC's draw period expires, you'll be unable to access any remaining approved loan amounts. Also, you're not obligated to draw the entire HELOC loan amount before the draw period expires. Once your HELOC's draw period ends, you must repay only the funds you took out,
not your approved loan amount. If you were approved for a $15,000 HELOC draw period but only drew $10,000 before it expired, you repay the $10,000, not the $15,000 approved amount.
Drawing During Repayment
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