Are principal payments required on Home Equity Lines of Credit (HELOCs)?

In the context of Home Equity Lines of Credit (HELOCs), the correct understanding is that principal payments are not mandatory, giving borrowers the flexibility to choose whether or not to make them. During the draw period of a HELOC, borrowers typically have the option to make interest-only payments, which can lead them to focus solely on interest without the obligation of principal repayments.

This flexibility is a key feature of HELOCs, allowing borrowers to have access to funds as needed while only being required to pay interest initially. However, once the draw period ends, borrowers enter the repayment period, where they will face the requirement to start making principal payments.

Thus, the option indicating that principal payments are only made if the borrower chooses aligns accurately with how HELOCs function, allowing individuals to manage their finances according to their circumstances during the draw phase.