HELOC to Term Loan Product?

Posted By: TINKerBell

HELOC to Term Loan Product? - 10/22/21 01:57 PM

Are there any other banks that offer an I/O HELOC that automatically terms out at the end of the I/O period (such as a 10 yr. P/I term)? If so, what disclosures would we need to provide this product? We are just looking at the possibility at the moment, but want to ensure that we are fully compliant with disclosures if we decide to add this product. Any help would be greatly appreciated!
Posted By: rlcarey

Re: HELOC to Term Loan Product? - 10/22/21 03:32 PM

Fairly common in other areas. In Texas it is a requirement, as Texas does not allow a balloon payment on a HELOC. The early disclosure and note agreement just has a draw period and a repayment period built into it. As far as I know most all HELOC doc prep systems support this product. Just be aware that even once the HELOC converts to P&I, it is still an open-end credit and you need to service it as such, i.e. monthly open-end period statements.