About the Hidden Costs of Home Equity Loans

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The most notable hidden cost associated with home equity loans is the origination fee, which is a point that the mortgage company will charge upfront against the value of the overall loan. Work with a company that has no origination fees with help from a registered financial consultant in this free video on money management and personal finance.

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Video Transcript

This is financial adviser, Patrick Munro, talking about the hidden costs of home equity loans. You have to be mindful when you are shopping for a home equity line of credit not only of the rate but also of the costs and fees associated with the acquisition of a home equity line of credit. The most notable of the origination fee. It's a point that the mortgage company or points that they will charge upfront against the value of the overall loan and these points certainly add to your debt burden. It is better to work with a company that has no points, no origination fees as they are called so that's the key word there. There is also many junk fees that are based on the closing at the table, at the closing table and these range from document charges to blown up fees on the appraisal of the property if there is already a bank appraisal that has been done in the last year it is not necessary to pay for a secondary appraisal which will increase the overall fees and costs again. So be mindful when you are talking to the loan officer about your home equity line of credit about their fee schedule and their overall charges that are there and make sure you get those charges in writing before you commit to a loan process. This is Patrick Munro talking about the hidden fees in home equity lines of credit.

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