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Equity Credit Line Process |
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- No Closing Cost option: covers lender and third-party closing costs through a higher interest rate
- Bring a check to closing (just like you probably did when you purchased your home)
- Deduct the closing costs from the cash proceeds of your line of credit
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Bringing a check to closing is a good strategy if you don't want to roll closing costs into the loan or if you don't want your balance to increase.
Covering lender and third-party closing costs through a higher interest rate
is often called a "no out-of-pocket cost" or a "no-cost"
loan. The "no out-of-pocket cost" or "no closing cost"
strategy makes the most sense when you're borrowing a small amount and plan to
pay it off fairly quickly. You don't commit any cash to getting the loan and
since you're paying it back quickly, the slightly higher interest rate isn't as
big of a concern as a loan you're going to have for years. And, with a
Bank of America home equity line of credit, all we require is that you keep the
minimum draw outstanding for six months and we'll waive the closing costs.
Including your closing costs in the loan/line amount makes sense if
you'd rather not commit any cash out of pocket to your loan. Amortized over the
term of your loan, the closing costs increase your new loan's monthly payment
only a small amount.
What's the best way for you to handle closing costs? Ask Bank of America. We
can recommend the best option for your situation.
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Anticipating loan costs
Decided a no-cost loan isn't the right option for you? Then let's look at the
various fees and charges you'll most likely need to pay before or at closing.
(See our Closing Cost Estimator for a
quote on your loan's approximate costs.)
Lender-related costs
Third-party fees
Lender-related costs
The cost of a loan is more than your interest rate. Prior to selecting a lender
for a specific loan, you should ask about their fees. At application, you'll
get what's called a
Good Faith Estimate of what the loan will cost. And this is just what
the name says. It's an estimate. And, in "good faith," it's as
accurate as possible given the information available at the start of the loan
process.
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 | | Lender-Related Costs (origination points or fees) | Home Equity Line of Credit |
| | | | | | Loan Discount Points
Amounts paid to a lender at closing in exchange for a discount on your loan's interest rate. Each point you pay equals 1% of the loan amount, so for a $50,000 loan, one point equals $500. |
| | | | | | Processing Fee
Fee charged by the lender to cover the cost of processing the loan. |
| | | | | | Pre-Paid Interest
Pre-paid interest on your new loan for the current month. If you close on May 21st , for example, you need to pre-pay the interest from May 22nd ? 31st . |
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See HELOC
Terms Summary for important terms on our most popular home equity lines.
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Third-party fees
Third-party fees are collected by your lender for services provided by outside
parties, such as an appraiser. All lenders require these fees and many of them
are regulated by various governmental organizations.
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| | Third Party Fees | Home Equity Line of Credit |
| | | | | | Appraisal Fee
Payment for an opinion or estimate of the value of a property. A report is typically prepared by a professional appraiser to explain the determination of the fair market value. Fee is often paid at the time of loan application. |
| | | | | | Credit Report Fee
Covers the cost of the credit report used to help determine your creditworthiness. |
| | | | | | Closing/Escrow/Attorney Fee
Pays for the services of the closing or escrow agent, or the attorney who handles the closing of your loan. |
| | | | | | Abstract or Title Search Fee
Pays for a written history of the title transactions involving the parcel of land where a home is located, including everything in the public record. The search checks for liens, unpaid claims, restrictions or other problems. |
| | | | | | Title Insurance Premium
Pays for insurance that protects the lender in case of an unresolved claim affecting the marketable title to the property. Special title binders and endorsements may also be included in this charge. |
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(For line amounts greater than $100,000, title insurance is required.) |
| | | | City/County/State Tax/Stamps
Some states have taxes related to the real estate transaction. These taxes range from a few dollars to 1¾ percent of the loan amount depending on the jurisdiction. Current states charging mortgage tax include Alabama, Florida, Georgia, Hawaii, Kansas, Maryland, Minnesota, New York, Oklahoma, Tennessee and Virginia. |
| | | | | | Recording Fees
Recording fees and transfer taxes are charged by most counties and localities for recording the equity line/loan documents and any liens in the public record. |
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. Some products may not be available in all states.