Low Mortgage Rates for Smart Loan Shoppers
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Low Mortgage Rates for Smart Loan Shoppers |
What Does Obtaining a Home Equity Line Cost?by Joe Taylor Jr.CMR Columnist While a home equity line of credit can give you easy access to a large amount of money, there can be substantial costs. Make sure that you can afford the fees and that the amount of money you need offsets your expenses. Home Equity Lines and Loans: Know Your OptionsIt's important to know the difference between home equity lines of credit and home equity loans. A home equity loan will give you a large amount of money at one time, while a home equity line gives you access to money as needed.Which one you choose depends on your needs. If you need the total amount of the loan in one lump sum, you might need a home equity loan. However, if you don't need all the money at once but anticipate needing the money in increments, a home equity line of credit might better serve your needs. Ask Your Lender about Home Equity Line CostsSome of the fees associated with home equity lines are similar to those you pay when you get a mortgage. Most lenders require a home appraisal, which can cost between $250 and $500. Some lenders require an application fee. Be sure to find out whether your lender will refund the fee if you are turned down for credit.Other upfront fees can include attorney fees, title searches, and "points" (1% of your credit line), although some lenders now are advertising that they will wave fees for home equity lines. Some home equity lines come with annual fees that can range from $25 to $75. You also may be charged a cancellation fee of several hundred dollars if you close your account in less than three years. Home equity lines almost always come with variable interest rates, which means you'll likely start with a low payment that will balloon after 10 or 20 years. You can use mortgage calculators to figure out what your higher payments may be--and if you can afford them. Sources Ehow.com Federal Reserve Board OurFamilyPlace.com About the Author Joe Taylor Jr. has covered business and finance news for Financial Times Television and CNBC. He coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities. © 2006 CMR. All rights reserved. |