Many of the costs that come with a line of
credit or term home equity loan are similar to
the ones you pay when you buy a home. They can
include:
1. Closing costs, which may include attorney
fees, a title search to verify your ownership
of the home, mortgage preparation and filing,
and insurance fees. 2. Estimate 2 percent to 5
percent of the loan for closing costs.
3. A fee for a property appraisal, which estimates
the fair market value of your home. This is sometimes
part of your closing cost.
4. An application fee that covers the cost of
processing the loan. This is not always refundable
if you are denied credit.
5. Points, which are service fees figured on the
total amount of the loan or credit line and usually
paid at closing. One point equals 1 percent of
the loan. For a $30,000 loan or line of credit,
one point would equal $300.
6. Annual maintenance fees that can go as high
as $100.
7. Transaction fees each time you make a withdrawal
from your credit line
Cancellation fee. If you pay off the loan early,
you may be required to pay this fee.
8. Inactivity fee. Borrowers who don’t use
their line of credit during a given period of
time might be charged.
By the way ...
• Banks sometimes waive closing costs and
other fees. Be sure to ask.
• Don't go with a lender just because they
will waive closing costs. Take into account the
entire cost of the loan. Shop around for the best
annual percentage rate.
• If your home has been appraised within
the last six months, it may not be necessary to
have another one as part of your loan procedure.
Be sure to ask.
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