Additional Costs of a Home Equity Line - A home equity credit line is similar to a taking out a mortgage in terms of the way one goes about obtaining an additional credit line.
Applying for a home equity line will include but are not limited to fees such as:
- Application fee
- Attorney fees
- Title Search fees
- Transaction fees – Depending on the lender and your plan, an additional fee will be charged every time the credit line is used.
- Annual Membership fee – Depending on the lender and you plan, an annual fee may be charged
- Point(s) before the credit line is used – 1 point equals 1 percent of the credit line you are granted, depending on the lender, you could be charged one or more points of the home equity line of credit up-front.
- Property Appraisal – The lender estimates the value of your home, but you pay for someone to come by and look at your house.
- Miscellaneous Paperwork fees
Lender Disclosure – The Truth in Lending Act requires lenders to disclose ALL fees (would include any of the above mentioned fees or more) involved with applying for a home equity line of credit before any fee is charged so READ EVERYTHING. Remember to do plenty of research, if you think something is missing; ask the lender BEFORE signing anything.
It is best to shop around for a lender that suits your needs. Always compare the amount of fees, and interest rate. There is usually a trade-off, high fees accompany lower interest rates and low fees usually accompany higher interest rates. You might be able to save money by using the same lender for your mortgage and home equity line; lenders usually treat these customers more favorably. In some cases, your current mortgage lender may offer you a home equity line of credit without you requesting one, which would cost you nothing (except the interest rate).
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