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Planning for Home Equity Financing End of Draw or End of Term

Talk with us to understand the next phase of your financing

Make sure you’re prepared for any financial challenges before your home equity financing enters end of draw or end of term status. Our specialists are ready to help you understand your options.

Are you ready for upcoming changes to your home equity line of credit or home equity loan? Your access to funds will come to an end, and you may face higher monthly payments or a large one-time payment. Call 1-877-221-1608 to learn more. A home equity specialist will review your account and help you make an informed decision.
Your home equity financing may be a line of credit or a loan. It’s important to understand your financing, because each has different funding and payment features. If you have:

  • A standard home equity line of credit: When you reach end of draw, your access to funds will end. You’ll enter the repayment period, when your monthly payments could go up substantially.
  • A balloon home equity line of credit: When you reach end of draw, your access to funds will end. Your account will then mature, and you’ll have a balloon payment and will need to pay your outstanding balance in full.
  • A balloon home equity loan: When you reach end of term, you’ll have a balloon payment and will need to pay your outstanding balance in full.
Whether you have a home equity line of credit or a home equity loan, your home serves as collateral for your financing. If you don’t repay your outstanding balance as agreed, your home could be at risk. If you’re experiencing financial challenges, you may qualify for a modification with new terms and a possible interest rate reduction.

Understanding your home equity financing

How do I know what kind of home equity financing I have?
To determine the type and terms of your home equity financing, call 1-877-221-1608 and speak with one of our home equity specialists.
What is a home equity line of credit?
A home equity line of credit is a form of revolving credit secured by your home. You’re approved for a specific credit limit and can draw on those funds up to the limit as needed during the draw period, which typically lasts for 10 to 15 years. Once you reach end of draw, you can no longer access additional funds through the line of credit. There are two main types of home equity lines of credit:
  • Standard home equity line of credit: During the draw period, you’ll make payments as required. You may have a variable interest rate. After you enter the repayment period, you’ll make full principal-and-interest payments (also known as fully amortized monthly payments) to repay your principal balance. The interest rate may change at this point ― from a variable rate during the draw period to a fixed rate during the repayment period. The combination of the fully amortized payments and the fixed interest rate may increase your monthly payments substantially, especially if you made interest-only payments1 during the draw period. With an interest-only plan, your principal balance is reduced only when you make voluntary principal payments during the interest-only period.
  • Balloon home equity line of credit: During the draw period, you’ll make payments as required. You may have a variable interest rate. When you reach end of term, you’ll repay your outstanding balance in full in a lump-sum balloon payment. This amount could be substantial.
What is a home equity loan?
A home equity loan is a form of closed-end credit secured by your home. You’ll receive the full loan amount once, at the beginning of the loan term, and must repay your loan in full by the maturity date. There are two main types of home equity loans:
  • Standard home equity loan: You’ll make full principal-and-interest payments (also known as fully amortized monthly payments) during your loan term. By making required principal-and-interest payments, you’ll repay your loan in full by the end of term, or the point that the outstanding balance is due in full.
  • Balloon home equity loan: You’ll make payments as required during your loan term. At the end of term, or the point that the outstanding balance is due in full, you’ll pay the balance as a lump-sum balloon payment. This amount could be substantial.
What is a balloon payment?
A balloon payment is a large lump-sum payment due at the end of some types of home equity lines of credit and home equity loans.

Learning about the next phase of your home equity financing

How far in advance should I prepare for my end of draw or end of term?
It's a good idea to plan for the end of your financing when you first open your home equity line of credit or home equity loan. Making principal-and-interest payments from the beginning will help when your financing enters the repayment period or when you have to make a balloon payment. Pay particularly close attention to your home equity financing at least two years before it enters end of term or end of draw.
What does end of draw mean and what happens?
For a home equity line of credit, end of draw is the point at which the draw period ends and you can no longer access funds. Most lines of credit have a 10- or 15-year draw period and then move into the repayment period, when you’ll repay your outstanding balance with full principal-and-interest payments (also known as fully amortized monthly payments). The interest rate may change from a variable rate during the draw period to a fixed rate during the repayment period. The combination of the fully amortized monthly payments and the fixed interest rate may increase your monthly payments substantially, especially if you made interest-only payments1 during the draw period. With an interest-only plan, your principal balance is reduced only when you make voluntary principal payments during the interest-only period. Some home equity lines of credit feature a balloon payment, when you pay the outstanding balance in one lump sum.
What does end of term mean and what happens?
For a balloon home equity line of credit, a fully amortized home equity loan, or balloon home equity loan, end of term is the point at which the outstanding balance becomes due in one lump sum. This amount may be substantial.
Can I get an extension on my current contract or maturity date?
No. We don’t offer extensions on any home equity loans or home equity lines of credit at this time. If you are experiencing a financial hardship, however, we may have options available. Talk with a home equity specialist by calling 1-877-221-1608.

Repaying your home equity line of credit or home equity loan

How do I refinance my home equity line of credit or loan?
To refinance your home equity financing into a new first mortgage, a new home equity line of credit, or a new home equity loan, you'll need to complete an application. If your financing is nearing end of draw or end of term, call 1-877-221-1608 to talk with a home equity specialist.
What if the new monthly payments during the repayment period are too high for me to manage?
If you don’t make the new monthly payments for your home equity financing, you’ll be in default, which could negatively affect your credit rating. Because your home serves as the collateral for your home equity financing, it may also be at risk. Start to plan for end of draw at least two years in advance. If you can’t make the new monthly payments as scheduled, you may have options through our Home Equity Maturing Accounts Program. To learn more, call one of our home equity specialists at 1-877-221-1608.
What if I can’t make the balloon payment that’s scheduled?
If you don’t make the balloon payment on your home equity line of credit or home equity loan, you’ll be in default, which could negatively affect your credit rating. Because your home serves as the collateral for your home equity financing, it may also be at risk. Start to plan for end of term at least two years in advance. If you can’t make the balloon payment as scheduled, you may have options through our Home Equity Maturing Accounts Program. To learn more, call one of our home equity specialists at 1-877-221-1608.
What happens if I can’t refinance my outstanding balance?
Depending on your financing, you may have other options to repay your outstanding balance. Call a home equity specialist at 1-877-221-1608 to learn more.
How can I determine how much equity I have in my home?
The equity in your home is what’s available after subtracting what you owe on your mortgage, and any other outstanding liens, from your home’s market value. Use our Home Equity Calculator to arrive at an estimate.
What if I don’t have any equity in my home?
We have may have options for home equity customers who are approaching the end of draw or end of term and have little or no equity in the home. To learn more, call a home equity specialist at 1-877-221-1608.
How can I pay my line of credit or loan in full?
For a payoff quote, call us at 1-877-221-1608.

Home equity line of credit information

  • A form of revolving credit secured by your home
  • Gives you access to a specific amount of money during a draw period, usually 10 to 15 years
  • May have a variable interest rate during the draw period
  • Discontinues access to funds at end of draw
  • Requires monthly payments according to your financing terms ― either interest-only payments1 during the draw period, which won’t pay down any of your outstanding principal balance unless you make voluntary principal payments during the interest-only period, or principal-and-interest payments, which will start paying off your balance

Standard home equity line of credit

  • Has a repayment period after end of draw when you’ll make principal-and-interest payments to repay your outstanding balance in full
  • May have a fixed interest rate during the repayment period
  • Important: Your monthly payments may increase substantially during the repayment period due to fully amortized monthly payments and the change to a fixed interest rate, especially if you made interest-only payments1 during your draw period. With an interest-only plan, your principal balance is reduced only when you make voluntary principal payments during the interest-only period.

Balloon home equity line of credit

  • Doesn’t have a repayment period after end of draw
  • Reaches end of term and requires payment in full as a lump-sum balloon payment
  • Important: Your balloon payment may be substantial, especially if you made interest-only payments1 during your draw period. With an interest-only plan, your principal balance is reduced only when you make voluntary principal payments during the interest-only period.

You can repay your home equity line of credit balance according to the terms of your financing or consider another option. To learn more about your repayment choices, call a home equity specialist at 1-877-221-1608.

Options

  • Convert to a fixed rate and term option: Allows you to take advantage of low fixed rates by converting your outstanding balance to a fixed rate and term before the draw period ends. Fixed rate advances can be unconverted back to the variable line of credit balance.
  • Refinance to a new home equity line of credit: Gives you ongoing access to available home equity funds with a new 10-year draw period.
  • Refinance to a new home equity loan: Gives you the stability of a fixed interest rate and term.
  • Refinance to a new first mortgage with Wells Fargo: Lets you refinance your home equity line of credit into a new Wells Fargo home mortgage at a fixed interest rate
Keep in mind that each situation is unique and line of credit plans vary. Some options may not be available to you.

If you’re experiencing financial challenges, you may qualify for a modification with new terms and a possible interest rate reduction.

Considerations

  • Refinancing may not be right for your situation. Talk with a home equity specialist to learn more.
  • Refinancing to a new first mortgage that includes a home equity line of credit or home equity loan may carry additional costs.
  • 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 for more information.

Home equity loan information

  • A form of credit based on the equity in your home, with your home serving as collateral
  • Gives you the full loan amount once, at the beginning of the loan term

Standard home equity loan

  • Has full principal-and-interest payments (also known as fully amortized monthly payments) during your loan term
  • Uses the required principal-and-interest payments to repay the loan in full by end of term

Balloon home equity loan

  • Requires monthly payments according to your loan terms ― either interest-only payments1, which won’t pay down any of your outstanding principal balance, or principal-and-interest payments, which will start paying off your balance
  • Requires payment in full as a lump-sum balloon payment at end of term
  • Important: Your balloon payment may be substantial, especially if you made interest-only payments1 during the loan term.
You can repay your home equity loan balance according to the terms of your original contract or consider another option. To learn more about your repayment choices, call a home equity specialist at 1-877-221-1608.

Options

  • Refinance to a new home equity line of credit: Gives you ongoing access to available home equity funds with a new 10-year draw period.
  • Refinance to a new home equity loan: Gives you the stability of a fixed interest rate and term.
  • Refinance to a new first mortgage with Wells Fargo: Lets you refinance your home equity loan into a new Wells Fargo home mortgage at a fixed interest rate.
Keep in mind that each situation is unique and loan plans vary. Some options may not be available to you.

If you’re experiencing financial challenges, you may qualify for a modification with new terms and a possible interest rate reduction.

Considerations

  • Refinancing may not be right for your situation. Talk with a home equity specialist to learn more.
  • Refinancing to a new first mortgage that includes a home equity line of credit or home equity loan may carry additional costs.
  • 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 for more information.
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Start preparing now

Talk with a home equity specialist at 1-877-221-1608, Monday – Friday, 7:00 am to 10:00 pm; Saturday, 9:30 am to 6:00 pm Central Time.
 
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Home Equity Line of Credit

 
A form of revolving credit secured by a borrower’s home. A borrower is approved for a specific credit limit and can draw on those funds up to the limit as needed during the draw period, making monthly payments as required according to the signed contract.
 
 
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Home Equity Loan

 
A form of closed-end credit secured by a borrower’s home. The borrower receives the full loan amount once, at the beginning of the loan term, and makes monthly payments as required according to the signed contract.
 
 
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End of Draw

 
For a home equity line of credit, end of draw is the point at which the draw period ends and the borrower can no longer access the funds. Most lines of credit have a 10- or 15-year draw period. Depending on the original contract, the borrower may be required to repay the outstanding balance with fully amortized monthly payments that include principal and interest or a single balloon payment.
 
 
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Repayment Period

 
For a standard home equity line of credit, the point at which a borrower must begin to make fully amortizing monthly payments, or principal-and-interest payments that will completely repay the outstanding balance during a certain period of time. If a borrower had been making interest-only payments, the monthly payments could increase substantially during the repayment period.
 
 
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End of Term

 
For a balloon home equity line of credit or a balloon home equity loan, end of term is the point at which the outstanding balance becomes due in full.
 
 
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Balloon Payment

 
A large lump-sum payment due at the end of some types of home equity lines of credit or home equity loans.
 
 
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Revolving Line of Credit

 
A line of credit that gives the borrower the ability to access available funds during the specified draw period. As the borrower pays down the principal, more credit becomes available during the draw period, up to the total amount of the approved line of credit.
 
 
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Draw Period

 
The fixed period of time — usually 10 to 15 years — during which a borrower may access or “draw” money from a home equity line of credit.
 
 
 
If you are a servicemember on active duty, prior to seeking a refinance of your existing mortgage loan, please consult with your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.
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The Interest-Only payment feature will allow you to make minimum monthly interest payments for a set period of time, then full principal-and-interest monthly payments for the rest of your loan term. At the end of the interest-only period, you will be required to pay down the outstanding principal, which will increase your monthly payment, possibly substantially, even if you have a fixed interest rate. You may want to consider making more than the minimum monthly payment during the interest-only period to begin reducing principal. Depending on the product specifics, a loan with the Interest-Only payment feature may result in higher interest rates and Annual Percentage Rates than a traditional mortgage product.
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