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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: jhorrocks/Getty Images March 22, 2022 Jennifer Calonia is an L.A.-based writer and editor. She's covered topics like debt, saving money and credit cards. You can find her work on Business Insider, Forbes and more. Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our home equity reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, different types of home equity options and more — so you can feel confident when you make decisions as a borrower or homeowner. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Leveraging your home equity through a or can help you fund large projects or expenses. If you have a major home renovation or planned expense and don’t have cash on hand, competitive rates might make borrowing from your home equity an appealing option. Before moving forward with this financing approach, remember that home equity loans and lines of credit come with expensive fees that you’ll need to factor into the loan’s total cost. While the average closing costs for a home equity loan or line of credit may be lower than the closing costs of a standard mortgage, it can range between of the total loan amount. Learn more about home equity loan closing costs and how to reduce them. What are home equity loan and HELOC closing costs and fees
Home equity loans and HELOCs have some features in common, including many of the fees you might see at closing. While some lenders offer no-closing-cost HELOCs, you may be required to pay a fee or reimburse your financial institution for those costs if you pay off and close your HELOC within a certain time frame. Origination fee: Some lenders charge an origination fee up front. Amounts vary by lender but may be either a flat fee or a percentage of the amount you borrow. Appraisal fee: Lenders may require that a determine the value of your property. Generally, this costs between $300 to $450. Credit report fee: As a part of any credit-based lending process, lenders check your credit score and report. This typically incurs a fee between per credit report. Insurance costs: This may include flood insurance costs if you don’t already have a sufficient flood policy, as well as property insurance and title insurance. Document and filing fees: Document preparation incurs fees, and professionals such as attorneys and notaries must review the paperwork. For example, a county recording fee might be up to $50. Title fees: Since the home is used as collateral for a home equity loan or HELOC, lenders will arrange a title search to see if there are any liens or claims to the property from another entity. This fee is typically about $100 to $450, depending on your area. Taxes: You might have to pay taxes, depending on your local laws or lender requirements. Costs vary; some areas require taxes between 1 percent and 3 percent of your loan amount. Points: Some lenders let you pay up-front fees known as “points” to lower your interest rate. Each point is 1 percent of your borrowing amount. Most HELOCs don’t have points. Other HELOC expenses
There are other possible HELOC-specific expenses to consider that aren’t part of closing costs. These fees can vary depending on the lender, and some may not charge them at all: Annual fees: This is a recurring fee for each year of an open account. The fee is charged regardless of whether you draw from the line of credit during the year. Transaction fee: Not all lenders charge this fee, but if yours does, you’ll pay a fee every time you draw from the HELOC. Inactivity fee: HELOCs that have no transactions for a certain period of time might incur an inactivity fee. Early termination fee: If you and close the account before the term in your agreement, the lender may charge an early cancellation fee. Read your loan documents and ask your lender about other HELOC costs that could potentially affect how much you end up paying. How to reduce your home equity loan closing costs
Closing costs can be expensive, but there are steps you can take to reduce these costs on your home equity loan: Reduce your . By paying off other consumer debt, such as unsecured credit cards, you’ll be in a stronger position to receive more closing cost options. For example, if you have less debt and a higher credit score, a lender might offer to add your closing costs to the loan principal so you have no immediate out-of-pocket costs. Shop around with multiple lenders. Comparing closing costs among lenders can help you find the most affordable home equity loan option for you. Negotiate with lenders. Don’t be timid about negotiating on home equity loan costs and fees. These added charges are often more flexible than the lender might let on. If a lender is unwilling to budge on its closing fees, consider working with a different lender. The bottom line
To explore whether borrowing against your home’s equity is right for you, see how much you might be able to borrow by using a . This starting point can help you better understand how the fees mentioned above might affect your total borrowing costs. If you’re ready to move forward with a lender, ask for an itemized list of closing costs. Check that the list includes verbal agreements regarding closing costs and that these agreements are included in your loan agreement. If something is missing, bring it up with your lender before signing the paperwork. Learn more
SHARE: Jennifer Calonia is an L.A.-based writer and editor. She's covered topics like debt, saving money and credit cards. You can find her work on Business Insider, Forbes and more. Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information.