Should I pay off my HELOC faster?​

If you have the available funds, paying off your HELOC faster can reduce the amount of interest you are paying, build your home equity and credit score, and give you peace of mind knowing you are on track to eliminate your debt. 

A home equity line of credit, or HELOC, traditionally works in two parts: a draw period, where you can access money up to an approved amount based on the home equity you’ve built while only paying interest, and a repayment period, where you will need to repay the principal and interest on your loan. 

A HELOC through Rate works a little differently. Our HELOC will give you an upfront lump-sum based on the home equity you have. As you pay back this loan, you will have the option to make additional draws. 

Whether you already have a HELOC or are learning more before applying, paying back your HELOC faster is one way you could save money over the life of your loan. Some ways of paying your HELOC back quicker may require a HELOC refinance. 

To begin the process of getting a HELOC or refinancing your current HELOC, start your application online today! 

If you are able to pay off your HELOC, here are some instances when you should be considering paying off your HELOC. 

If your HELOC comes with a variable interest rate, you will notice that you are paying more as interest rates rise. 

When interest rates rise, you could avoid paying more during the life of your HELOC by paying it off faster. You do not need to worry about interest rates rising if your HELOC has a fixed rate. Make sure you are keeping an eye on mortgage rates to see when rates increase. 

As your draw period ends, you will enter your repayment period, during which you will have to make payments on the loan amount as well as interest. To avoid interest rates during your repayment period, you can pay off your HELOC before or as your draw period ends. 

If you have any regular expenses coming up, you can make room in your budget by paying off your HELOC early and freeing up your cash flow. Not having to make monthly payments means you could free up your budget from regular payments on your HELOC loan amount and interest. 

If you are looking for ways to pay off your HELOC faster, these are a few options you could consider. 

Making extra or larger payments are the most common ways borrowers choose to pay off their HELOC faster.  

Using any extra cash you might come across, such as a bonus, tax refunds or inheritances, is the easiest way to pay down your loan amount and pay off your HELOC quicker, possibly avoiding future interest payments. 

Talk with your lender to find out if there are any rules or requirements for paying off your HELOC early with larger payments. 

With a variable interest rate on your HELOC*, some months you could pay more than others. Refinancing your HELOC to a fixed rate can make your monthly payments more predictable. If you are able to refinance when interest rates are lower, you could free up some money. Putting this extra money toward the principal of your loan could help pay off your HELOC quicker. 

Switching from making monthly payments to making half payments every two weeks will result in one more full payment a year, compared to the standard monthly payments. Bi-weekly payments will slowly reduce your loan amount and the time it will take to pay back your HELOC. 

To learn more about available HELOC options, you can talk with a Loan Officer. 

If you are trying to find the HELOC option that is best for your needs or financial situation, you can connect with a Loan Officer in person or online. Loan Officers can look at your needs and let you know if or what you can do to qualify for the HELOC that will help you best fulfill your goals. 

After you have learned more about and chosen a HELOC option for you, you will be prepared to start an application. 

_{* The variable rate home equity line of credit (HELOC) is an open-end product where the borrower can withdraw funds and make interest only payments during the draw period. Monthly payments will increase to include both principle and interest payments after the draw period has ended. A minimum 90% of the total approved HELOC amount must be disbursed. The remaining 10% of the approved credit line can be drawn down later as needed during the draw period. The monthly variable interest rate is based on an Index, which is the Prime Rate published in the Wall Street Journal plus a fixed margin. This product is currently only available in Arizona, California, Illinois, Massachusetts, and New Jersey. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Property type, loan-to-value, and FICO restrictions and requirements apply. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Rate for more information and to discuss your individual circumstances. Restrictions Apply.} 

_{Information provided is for educational purposes only. It should not be construed as financial or legal advice or instruction. Rate does not guarantee or assume liability for the accuracy, completeness or timelines of the information. You should conduct additional research before making any mortgage related decisions.} 

_{Applicant subject to credit and underwriting approval. Restrictions apply.}