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Step 1
Determine where you are on your loan. If you have a balloon loan, you'll need to take into account how far you've paid it down, or how much over the principal balance you are. Review all advances taken on the line of credit, as these must be repaid. Review your most current loan statement and make sure it corroborates with your own calculations.
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Step 2
if you plan to pay off your HELOC with another loan, make sure you're making a good financial decision. Ensure you are making some benefit by refinancing your loan. These benefits include: lower rate, lower payment, lower term and more flexibility. Review all documents prior to signing a new loan to make sure it will meet one or more of these benefits.
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Step 3
Take stock of your bank account(s). If you plan to use your own money to pay off a HELOC, think carefully about the impact on the rest of your finances. Think, for example, if you'll need any of the funds for future purchases like a car, new home, or an ancillary expense. The goal is to improve your financial health, not put yourself in a worse situation. If you feel like it is a healthy decision, contact your lender and get a payoff amount with a good through date and a per diem. Ensure your payment reaches the lender prior to the payoff date quoted. Follow up 30 days later to make sure the account is paid in full, and if it is a line of credit, the line is closed.
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Step 4
Make the necessary calculations to payoff your loan in a specified period of time. There are several options for mortgage calculators, but a reputable site is listed below. Use this calculator to play around with different payment figures which give you different options for repayment. For a much lower term (years needed to fully repay the loan), your payment will rise considerably. Consider all future financial decisions before retooling your mortgage payments.
