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All home loans charge closing costs. The only question is how much they’ll be and who will pay them—the borrower or the lender? Take note of the fees you might be charged to take out a home equity loan or home equity line of credit (HELOC), and how much you might pay for them.
Home Equity Loan Closing Costs
The closing costs for a home equity loan will look familiar if you’ve taken out a mortgage before.
| Common Home Equity Loan Closing Costs | |
|---|---|
Appraisal Fee | $400 to $700 |
Credit Report Fee | $50 to $100 |
Origination Fee | 0.5% to 1% of the loan amount |
Title Insurance or Title Search Fees | 0.5% of the loan amount |
Attorney or Notary Signing Agent Fee | $200 to $300 per hour, or a flat fee of several hundred dollars (attorney); $150 to $250 (notary) |
Settlement Fee | Varies |
Appraisal Fee
- Cost. $400 to $700
A home appraisal is a professional assessment of your property’s value. Lenders require an appraisal as a condition of approving your mortgage because they want to make sure the home is worth what you’re paying. That way, if a lender has to foreclose on your home because you can’t repay the loan, it’ll have a shot at selling the property for enough money to recoup its losses.
Home appraisals generally cost between $400 and $700, according to the National Association of Realtors’ 2023 Appraisal Survey. Pricing depends on location, home size, your home’s uniqueness and more. Essentially, the cost depends on how much time and expertise are required to accurately estimate the property’s value.
If the lender can use an automated valuation model to determine your home’s value, the fee may be negligible.
Credit Report Fee
- Cost. $50 to $100
When you apply for a mortgage, the lender will order a single credit report that contains your scores and history from all three credit bureaus. If you have a joint applicant, the lender will order a joint credit report.
The credit report fee covers the lender’s cost of learning how you’ve handled current and past debts, such as your payment and collections history.
The lender will also learn what your monthly debt obligations are. They can compare this figure to your income to see whether you can afford the mortgage you’re applying for.
Origination Fee
- Cost. 0.5% to 1% of the loan amount
A mortgage origination fee covers the lender’s costs to process your loan application, review your financial information and approve your mortgage. It helps pay for the loan officers, underwriters and other aspects of the lender’s business operations that help you qualify for a home loan.
Sometimes the origination fee on a home equity loan will be a low flat fee, such as $99, instead of a percentage fee.
Title Insurance and Title Search Fees
- Cost. 0.5% of the loan amount
Title insurance protects the lender from future disputes over who owns your property that arise from events occurring before you take out a mortgage. Title insurance rates vary by state.
The title search makes sure there are no existing title problems.
These fees may be itemized, or they may be lumped together under the label “title service fees.”
Attorney or Notary Signing Agent Fee
- Cost. $200 to $300 per hour, or a flat fee of several hundred dollars (attorney); $150 to $250 (notary)
Some states require borrowers to use a real estate attorney to review loan documents. In others, an attorney is involved as a matter of custom. Working with an independent real estate attorney means you have someone looking after your interests. It also gives you a chance to ask about any language or loan terms you don’t understand in your closing documents.
In states that don’t require an attorney for closing, you’ll only need a notary to verify your identity and guide you through signing each document.
Settlement Fee
- Cost. Varies
This fee compensates the title, settlement or escrow company for preparing your closing documents, processing your signed documents, recording the mortgage with your local government, transferring your loan proceeds and preparing a loan settlement statement once the closing is complete.
The cost will vary by state and provider, in part because the number of services included in this fee vary significantly. For example, if a title company performs your loan closing, a settlement fee may include your title search fee. If you’re required to use a real estate attorney to close, settlement fees may be included in the attorney’s fee.
HELOC Closing Costs
HELOCs sometimes have additional costs that home equity loans don’t.
| Common HELOC Closing Costs | |
|---|---|
Annual Fee | $50 to $100 |
Early Termination Fee | $500 |
Inactivity Fee | $100 per year |
Transaction Fee | Varies |
Annual Fee
- Cost. $50 to $100
Some lenders impose this administrative charge for each year of a HELOC’s draw period. The typical annual fee is $50, but some lenders may charge a higher price.
Early Termination Fee
- Cost. $500
Particularly when the lender pays your closing costs, you may have to pay a fee if you close your HELOC within 36 months of opening it. The people who pay this fee typically do so because they’re selling their home, and that means paying off all the loans secured by the property.
Inactivity Fee
- Cost. $100 per year
If you don’t take any draws against your credit line for 12 months, some lenders will penalize you with an inactivity fee.
Transaction Fee
- Cost. Varies
Some HELOC lenders will charge you money each time you borrow from your credit line. HELOCs that allow you to convert your variable-rate balance to a fixed-rate balance may also charge a transfer fee when you exercise this option.
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How To Reduce Your Home Equity Loan Closing Costs
Whether you’ve already received an estimate or you’re just planning ahead, you should know that you have several options for getting a better deal on closing costs, including:
- Shop around for lenders. Many people only apply with a single lender when shopping for a home loan, and the people who do shop around might only submit two applications. Ideally, you should submit between three to five applications. Every lender has a different risk appetite, so you’ll get different interest rates and closing costs from each one.
- Find a zero-closing-cost lender. Yes, you can get a home equity loan without closing costs. Some lenders waive most or all closing costs on home equity loans and HELOCs. They might compensate by charging a higher interest rate. The longer you think you’ll keep the loan, the more important a low rate is. However, if you think you won’t keep the loan long, minimizing your closing costs could save you more money.
- Negotiate. Use your lowest loan estimate as leverage. Share it with the other lenders you got estimates from and see if any of them will lower their home equity rates or fees to win your business.
