What will a HELOC cost? Other than interest?

[spncity]

Feel free to read and reply or ignore.

Years ago I explored a HELOC. They would not charge closing costs UNLESS you sold the house within four years. If you did sell within four years, then all the closing costs came back to haunt you.

So - what should I expect these days in the areas of:

1. Closing costs
2. Interest - what's a decent rate?
3. Restrictions that would trigger having to pay closing costs

Thanks!

 

[Senator]

My HELOC is 100% free. It did not cost anything to set up.

I pay $500 if I close it out within the first three years, even if I get a larger balance HELOC from the same bank. It currently has a $0 balance, so no interest charges. The interest rate is at prime less 0.5% if I take any money out.

I can keep it as a line of credit, have it ready to invest in a property, or a truck, or a trip to the strip joint.

I am going to use it to pay off a mortgage which is ~2% higher interest. I should have the HELOC paid off in ~6 months after that.

 

[Marita40]

I took one out at WellsFargo to use for part of a kitchen remodel. Set up was free. I borrowed 10,000 last May and will finish paying it off in February. The first year interest rate is 3.4; thereafter it is 4.2.
There's a penalty of 300. to close it within 3 years and a 75. annual fee. So I'll end up paying the annual fee for a couple years. I don't like it and should have shopped around a bit more. But it did allow me a lovely new kitchen which I enjoy every day.

 

[rodi]

PenFed had a charge if you close it within a few years... I don't remember how many.

No origination/start up costs.

Interest if you use it.

For me - it's strictly a backup emergency fund and a source of cash if I want to income smooth an expense over two years (for ACA PTCs reasons I might want to keep my income lower - so not pull from tax deferred all in one year.)

But - like I said - no plan to use it... just there "in case".

 

[Another Reader]

No fees for mine at Wells Fargo. Paid off a rental mortgage originally. Paid it down, then borrowed more to remodel a rental to sell. Used the proceeds from the sale to pay off three higher rate rental mortgages.

Went to the bank today so I stopped and asked what the rate on the remaining first draw will be in January when it floats. Could hit 5 percent if the prime rate goes up after the Fed meeting in December. Got pitched to refi at 1.99 percent for a year or 4.375 for the next three years. Would have to roll in the smaller amount and lower rate on the second draw. No cost. Maybe, or maybe I will just pay off the first draw.

 

[Grabberson]

I got one through US Bank about 5 years ago. There were no set-up fees, and no interest charges unless I actually borrow the money. Predictably, they made borrowing the money effortless by providing a checkbook and a debit card tied to the loan.

At that time, they offered two options. (1) pay no fee and get their standard interest rate, or (2) pay $90/year and get a slightly better interest rate. I went with option #1.

Used it to buy a property once, but haven't carried a balance in years, and keep it alive because that seems prudent for some reason.

 

[doneat54]

I've had a couple, both with BoA (a Bank of which I am NOT a fan). Nice cushion to have at the ready an no fees. But at least for me, it was PAINFUL to get rid of. I forget the exact circumstances, maybe a refi, but I had to close it out to clear my credit history. Even with a zero balance, it was very hard to get rid of.

My other beef (of many) with BoA is that with the HELOC I have with them now, I can't see any of the in/out transactions in the account on their website. If I make a payment, have interest assessed, take out a withdrawal, it is all hidden from me on their website. Drives me crazy. If you are going to get one at any bank, and that is important to you, ask about it up front.

 

[tennisplyr]

Took out one about 8 years ago, no fees. I recently sold my house and paid off the HELOC, no problems and would do it again if I buy a home.

 

[latexman]

Just took one out at NCSECU for $75k. The only cost was $330 for an appraisal. The rate is 3.5%. It is valid for 15 years.

 

[Another Reader]

Just took one out at NCSECU for $75k. The only cost was $330 for an appraisal. The rate is 3.5%. It is valid for 15 years.

Fixed or variable rate? Most are variable.

 

[latexman]

It is variable and tied to 26 week T-bills.

 

[rodi]

Just took one out at NCSECU for $75k. The only cost was $330 for an appraisal. The rate is 3.5%. It is valid for 15 years.

I was surprised that there was no charge for appraisal when we opened ours... but then again we have a debt free home in an expensive market.... so they knew the equity was there.

 

[jazz4cash]

I am considering a Heloc at navy federal credit union and the loan officer mentioned county taxes. AFAIK, there should be no taxes only recordation fees. He said they outsource this to the title co and sounded unsure about it although he was knowledgeable otherwise. I just went through this at another credit union for a refi on the 1st which was withdrawn because they quit returning my calls. NFCU also said I could not select a different title co.
Their process is antiquated.