Annual Fee for HELOC?

[Marita40]

If you have a HELOC but don't use it--often at least--do you pay an annual fee just to maintain it? I opened one last May to borrow a small amount of money for a kitchen remodel; it will be paid back by next March. There's a $75 annual fee to maintain the HELOC. I'm on the fence about continuing it because a) I'm constitutionally opposed to annual fees like that, and b) it might make it too easy to borrow money in the future. On the other hand some seem to advise that it is a good idea to hold onto a HELOC. Interest is variable starting at 4.2% (although I got 3.4% this first year).
What to do?

 

[ProspectiveBum]

I have a HELOC with BofA. No fees. I'd shop around for a better deal.

Edited to add: I like having the HELOC as a safety net. I never use it, but it's comforting to know that it's there, just in case. If you think you might be tempted to spend from it "just because", my advice would be: don't.

 

[TrvlBug]

Mine has no fees other than a $250 or so fee if close within the first 2 years.

 

[bmcgonig]

I have a HELOC with BofA. No fees. I'd shop around for a better deal.

Edited to add: I like having the HELOC as a safety net. I never use it, but it's comforting to know that it's there, just in case. If you think you might be tempted to spend from it "just because", my advice would be: don't.

Same here. I have one from Pen Fed, cost nothing to get it, except for some notary fees, and nothing to keep it. Lasts for 15 yrs.


Sent from my iPad using Early Retirement Forum

 

[rodi]

I have one (also with penfed). No fee. I don't think there was a notary fee, either. Like ProspectiveBum it's there as a safety net... no plan to use it. Zero balance. If I had to pay a fee, I'd close it.

 

[aida2003]

I, OTOH, would like to ask for a quick primer about HELOC. I know nothing about them but I've read here and other blogs that people get them before they retire.
If some of you don't have fees, does it cost you anything to have it 'on your books'?
When do you pay interest on it: only when you use it but nothing until then?
What amount and what period can you get HELOC for?
If I ever wanted to get it, do I get a list of banks/CU on the Internet and start 'shopping' this way?
Why do you get it? Is it like an emergency line of credit for 'just in case'?

If you still think I should start a new thread, please, let me know and I'll do it.

 

[2017ish]

I, OTOH, would like to ask for a quick primer about HELOC. I know nothing about them but I've read here and other blogs that people get them before they retire.
If some of you don't have fees, does it cost you anything to have it 'on your books'?
When do you pay interest on it: only when you use it but nothing until then?
What amount and what period can you get HELOC for?
If I ever wanted to get it, do I get a list of banks/CU on the Internet and start 'shopping' this way?
Why do you get it? Is it like an emergency line of credit for 'just in case'?

If you still think I should start a new thread, please, let me know and I'll do it.

Take a look at a Bank website, which will give you a good overview. Here is BoA (not as a recommendation, but because it is convenient....): https://www.bankofamerica.com/home-equity/ and https://www.bankofamerica.com/home-loans/home-equity/basics.go

Doesn't cost to have on books unless you have drawn on it. Periods will vary, but 10 years of drawability is common. We don't have one yet, but will get, most likely, a 200K line in the next nine months before we retire. It will be an extra belt to go with our belt and suspenders for two+ years until DW hits 59.5. May also be the source of RV purchase monies....
______
Edited to fix DW's age....

 

[Sunset]

I have one on a rental property I own, used it a bit to cover shortfalls over the years, paid it off so the balance is zero many years ago.
It costs nothing to keep it, actually costs something to close it like a mortgage does.
Since it's free to keep, I keep it as who knows I might want to use it someday.

I wouldn't pay a yearly fee for something like that.

 

[l8_apex]

First Interstate: $400 to initiate it, $75/yr to keep it, no charge to close it. 3.5% for the first year or two, then variable thereafter. Not much choice here, this is the best I was able to find in-town.

 

[Marita40]

Mine is similar to yours I8_apex, except I didn't have to pay any up front costs to initiate it. However, mine does have a $400. to close it within the first 3 years. So I'm stuck paying the $75/year maintenance fee for a couple years one way or another.

 

[ProspectiveBum]

Like bmcgonig and rodi said, check with PenFed next time. The only charges at initiation are notary fees, and they have no annual maintenance fees. Good rates, too. I have my primary mortgage with them (refi), and have been very happy. When my BofA HELOC expires, I'll re-up with PenFed.

 

[Marita40]

I agree about PenFed. I'm afraid I didn't quite do my full homework on my current WellsFargo HELOC but will do so in the future.

 

[SumDay]

Mine has no fees other than a $250 or so fee if close within the first 2 years.

Same here. We just got one through our local, hometown bank.

 

[kaneohe]

I had one for 10 yrs w/ Schwab. No fees.......initial or annual. I never used the LOC during that time.

 

[doneat54]

I have one with BoA and don't pay an annual fee. But be advised that they are sometimes very hard to get rid of, even with a zero balance. I forget the details now, but I had to get one off my record to create a spotless credit history and even though it had a $0 balance, it was PAINFUL to get rid of/off my account.

 

[ExFlyBoy5]

+1 on PenFed. Got it back in 2013 before I retired. No fee unless closed within 2 year. I *think* there might be a fee for an appraisal, but this is only if you are seeking a fairly high LTV. At the time I got mine, the LTV was about 30%, so no issue there. The only $$$ I have been out is the notary fee @ the UPS store when I closed.

I have yet to use it, but it's a good cushion in case there is some sort of VERY LARGE expense that I would need to cover for a short period. I *think* the interest rate is around 3.75% (haven't checked in a while) so *if* I had to use it, it's about as cheap a loan you can get.

 

[ExFlyBoy5]

I have one with BoA and don't pay an annual fee. But be advised that they are sometimes very hard to get rid of, even with a zero balance. I forget the details now, but I had to get one off my record to create a spotless credit history and even though it had a $0 balance, it was PAINFUL to get rid of/off my account.

I would guess it was difficult because it was the "BoA Constrictors." I only say that because back in 2006, they denied us a mortgage because they couldn't "verify my employment." I always found this very odd since we were putting 30%+ down, I had been employed by the AF for 13 years (and was going to continue to be employed by them) had a credit rating of 750+ and that was the time when "ninja loans" were hot and heavy. So, after that, BoA has been dead to me.

 

[6miths]

2.7%. No fees.

 

[Texas Proud]

One thing to remember.... they CAN take it away...


Back in the housing crisis, Chase took away my HELOC.... I did have money out on it as I had paid off my mortgage since it was a higher rate... and my balance was maybe 20% of the value of the house... but, got a letter saying I could not take any more money out....


Mine did not have a fee...

 

[tennisplyr]

I'm 66, retired and had a HELOC. Recently sold my house and paid if off. It was great to have and I did use a couple of times instead of withdrawals. Cheap money and was good to have psychologically. Would get another when I buy another home. Also it's a decent way to "spend down" equity from home.