What HELOC draw period should you choose?
An important consideration when you’re shopping for a HELOC is the draw period.
This period is how long you can use the line of credit before needing to pay it off. During this draw period, you can take money out, pay it back, then take it out again, over and over.
HELOC Draw Period Options
Most HELOCs come in two different draw periods: either a 5-year or a 10-year. The longer the draw period, the more flexibility you have.
However, we still recommend setting yourself up with the longest draw period available to you. When you need to refinance, but you’re stuck in a down market, you’ll probably get worse terms on your new HELOC. A longer draw period gives you more control over a better refinance.
Refinancing a HELOC
You’re able to refinance a HELOC at any time. In fact, we recommend searching for better HELOCs every 1-3 years. If you refinance before your draw period ends, then that period doesn’t matter as much.
So, when you start the process of getting a HELOC to buy an investment property, set it up to be long-term. Even if you choose to refinance, you should still look to start with the highest LTV and longest draw period possible.
More Info on Using a HELOC as a Real Estate Investor
Want more information on how to talk to banks when looking for a HELOC to buy an investment property? Download this free checklist.
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