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Understanding Home Equity Loan Fees and Closing Costs


Mar 19, 2023



Get Cash When You Need It: Consider Home Equity Loans and HELOCs, But Be Aware of the Costs Involved.

At Hitch, we're committed to providing consumers with helpful, unbiased information about financial products and services. To do this, we feature a range of companies on our site that offer these products and services.Dreaming of renovating your home, covering bills, or consolidating debt? Home equity loans and home equity lines of credit (HELOCs) can be smart ways to fund these expenses by tapping into the equity you've built in your home.

A home equity loan gives you a lump sum at closing, while a HELOC gives you access to credit to use at your discretion, giving you the flexibility to borrow what you need, when you need it.

But before you apply for either of these loan products, it's important to consider the costs. HELOCs and home equity loans come with several fees that can add up quickly, such as closing costs, origination fees, and appraisal fees.

At Hitch, we believe in empowering consumers to make informed financial decisions. That's why we've put together a guide to help you understand the costs associated with home equity loans and HELOCs. From there, you can make the best decision for your unique financial situation.

Ready to unlock the cash in your home equity? Let's explore the costs you'll want to consider before you apply for a home equity loan or HELOC.

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Equal Housing Lender

Hitch, Inc. NMLS #2383367 #2383367

2158 NW Toussaint Drive. Bend, Oregon 97703

1. Qualified applicants may borrow up to 95% of their home’s value. This does not apply to investment properties.

2. HELOCs have a 10-year draw period. During the draw period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) the total of all accrued finance charges and other charges for the monthly billing cycle. During the draw period, the monthly minimum payments may not reduce the outstanding principal balance. During the repayment period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) 1/240th of the outstanding balance at the end of the draw period, plus all accrued finance charges and other fees, charges, and costs.The lender will calculate this amount by taking the outstanding Account Balance on the last day of the draw period and dividing it by 240 months and then adding any finance charge that accrues but remains unpaid during the monthly billing cycle plus any other fees, charges and costs to the fixed principal payment that is due. During the repayment period, the monthly minimum payments may not, to the extent permitted by law, fully repay the principal balance outstanding on the HELOC. At the end of the repayment period, the borrower must pay any remaining outstanding balance in one full payment.

3. The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Most borrowers get their cash on average in 21 days. The time period calculation to get cash is based on the first 4 months of 2024 loan funding's, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications. Closing costs can vary from 3.0 - 5.0%. An appraisal may be required to be completed on the property in some instances.

4. Not all borrowers will meet the requirements necessary to qualify. Rates and terms are subject to change based on market conditions and borrower eligibility. This offer is subject to verification of borrower qualifications, property evaluations, income verification and credit approval. This is not a commitment to lend.

5. The content provided is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply.