A homeowner is approved for a $50,000 HELOC structured with a 10-year draw period followed by a 20-year repayment period. During the draw period, the homeowner borrows $30,000 and makes no additional draws. Which statement accurately describes what happens at the end of the draw period?

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The borrower can no longer access the line of credit and must begin repaying the $30,000 outstanding balance over the 20-year repayment period At the end of the HELOC draw period, access to the line of credit is closed — the borrower can no longer draw additional funds regardless of how much unused credit remains. The borrower then enters the repayment period (20 years in this example) and must repay the $30,000 outstanding balance, typically through monthly principal and interest payments. "The borrower can continue drawing from the remaining..." is incorrect; borrowing privileges end when the draw period ends, even if credit was unused. "The borrower can no longer access the line of credit..." is incorrect; refinancing is not required — the existing HELOC terms provide for a repayment period. "The HELOC automatically converts to a fixed-rate ins..." is incorrect; HELOCs do not automatically convert to fixed-rate loans, and lenders do not offer rate reductions for on-time payments as a standard feature.

A homeowner is approved for a $50,000 HELOC structured with a 10-year draw period followed by a 20-year repayment period. During the draw period, the homeowner borrows $30,000 and makes no additional draws. Which statement accurately describes what happens at the end of the draw period?

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