HELOC closing fees typically range from 1% to 5% of the credit limit, covering appraisal, title, recording, and application fees, though many lenders offer "no closing cost" options by rolling fees into higher rates or offering discounts, with credit unions often having lower costs. Common fees include appraisals, title searches/insurance, notary, and recording fees, but some lenders waive these or offer incentives, so comparing lenders and checking for early termination clauses is crucial.
Closing costs on home equity loans and home equity lines of credit (HELOCs) generally range from 2% to 5% of the loan amount or credit line. On a $100,000 loan, that's $2,000 to $5,000 in additional costs. But closing costs are also variable and negotiable.
It really depends on the lender and their policies. Some charge a flat fee, usually between $300 and $500. Whereas others might charge a percentage of your credit line, often between 2% and 5%. So if you had a $50,000 HELOC, a 2% early closure fee would cost you $1,000.
Discharge Fee – Once you've paid off your HELOC in full, you will likely need to pay a discharge fee, which can cost anywhere from $200 to $350.
You can pay off your HELOC early, but be mindful of pre-payment fees, if any. If you have a Citizens HELOC, you're in luck as Citizens does not charge pre-payment fees. HELOCs allow you to make interest-only payments during the draw period, then transition to principal and interest payments during the repayment period.
If you close a HELOC that's in good standing, the closed account can stay on your credit reports for up to 10 years. The payment history and age of the account could continue to affect your credit scores throughout this time. Closing an account could impact your credit scores in more immediate ways, however.
The "HELOC 65% rule" refers to a Canadian regulatory guideline, primarily from OSFI (Office of the Superintendent of Financial Institutions) (2, 6, 12), capping the maximum Loan-to-Value (LTV) ratio for Home Equity Lines of Credit (HELOCs) at 65% of a property's value, replacing older limits (like 80%) to reduce risk, meaning you can borrow up to 65% of your home's value, minus your mortgage balance, for a smaller credit line than before.
You may be able to refinance the HELOC itself, either to another HELOC or to a home equity loan with a fixed-interest rate and payment. Both these HELOC repayment options typically have the advantage of lower closing costs and less hassle than a cash-out refinance. But they'll likely come with higher interest rates.
How can I avoid paying an early repayment charge?
The 3-7-3 Rule in mortgages isn't a loan type but a federal timeline from the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection by mandating disclosures within 3 business days of application, a 7-business-day wait between the initial Loan Estimate and closing, and another 3-day wait if significant changes (like APR) occur, giving borrowers time to review costs before committing to a loan.
If you pay off your home equity loan early and don't want to pay the annual fees and get a second mortgage, then closing the home equity line of credit can be a good idea.
You can expect to pay 3% – 6% of your total loan amount in closing costs for a home equity loan. For example, if you take out a $100,000 home equity loan, you can expect to pay $3,000 – $6,000 in closing costs.
With a Bank of America HELOC, there are no closing costs, no application fees, no annual fees, and no fees to use the funds.
You may be able to reduce closing costs in the following ways:
You can find your ERC details in your latest mortgage offer. Your annual mortgage statement also shows any applicable ERCs at the date of each statement.
Closing costs on a HELOC can range from non-existent, all the way to 5% of the loan amount. While some lenders do not charge closing costs, be sure to read the fine print. In terms of annual fees, some banks charge around $50 a year for a HELOC.
The Bottom Line
When you take out a home equity loan, you have three business days during which you can cancel it without consequence. If you choose to exercise this right, your lender must return any fees or payments. After this period, you'll have to pay back the loan in order to get rid of it.