If you're considering taking out a Home Equity Line of Credit (HELOC), you may be wondering if you can change your mind later on. The answer is yes, you can cancel the HELOC for any reason within the three-day period. All you have to do is inform the lender in writing and they must then cancel your security right on your home and return the fees you paid to open the plan. A HELOC is a type of mortgage that allows the homeowner to access the capital of their home through a line of credit.
It's like a credit card: you qualify to receive an amount and then decide how to use it - all, part, or even just part of it. During the drawing period, which usually lasts about 10 years, you are responsible for paying only the interest, although you can change your line of credit by making more substantial payments to cover your capital. When that is over, you will enter a repayment period, during which you will no longer be able to withdraw funds from your line of credit and must return what you borrowed with interest. Your lender may charge you an inactivity fee if you open a HELOC but don't use it, or a cancellation fee if you decide to cancel the line of credit before the repayment period ends. At this point, it's important to note that if the home used to secure your HELOC is your primary home, you have three business days from the day you open your account or the day you receive the account opening disclosures (whichever happens later) to change your mind and cancel your HELOC.
By comparison, other lenders will require the normal home loan process, which can take 30 to 90 days to close. We can close a non-Texas HELOC in a few days thanks to our fully automated online process. A home equity loan is a fixed loan that involves a single disbursement of funds, while a HELOC is a variable and revolving line of credit that allows funds to be available for withdrawal and repayment for a specified period of time. If you're not sure if a home equity line of credit (HELOC) is right for you, it's important to consider all factors before making a decision. Think of a HELOC as a credit card that is attached to the capital of a home; the loan balance can be charged repeatedly and then paid off monthly.
Keep in mind that your payment may be significantly higher if you have only made interest-only payments.