Penalty for Early Termination on a Home Equity Line of Credit
The penalty for early termination on a home equity line of credit usually falls within a particular bank's guidelines. Learn about recording fees and the possibility of reimbursing a bank for these fees with help from a financial specialist in this free video on home loans and money management.
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So you've had your home equity for a couple of years and you're wondering is there any consequences if I pay it off early? My name is Matt McKillen, I'm with Innovative Financial Group and I've been asked are there any penalties for terminating a home equity loan early. Generally the program falls within the bank guidelines. If you received your home equity line in the beginning and a lot of the banks do offer home equity lines at zero cost, there's absolutely no cost to your whatsoever to have that equity line available on your property. But the bank does actually pay costs in conjunction with that loan they're giving you. Depending on what state you're in, whether it's a deed of trust or a mortgage, usually there's recording fees that are involved to record that lien against your property, there are title insurance that must be paid for and even sometimes they pay to have like a drive by appraisal done on your home. So there are actual costs incurred by the bank even though they're not passing that on to you as a customer. Most of the banks that offer these loans at no cost have a provision in their mortgage or their note that states if you pay your loan off within the first three years that you had your home equity loan open, that you must reimburse the bank for those setup fees in the beginning. Thanks again, my name is Matt McKillen with Innovative Financial Group.