Should I pay fees to set up a HELOC?

[Steve Sauro]

I'm considering getting a HELOC against my primary residence since have a lot of equity in the home. The question I have is should I expect to pay a fee to set up the LOC? I realize and understand the variable interest rate once I draw on it - but will there be a cost associated with establishing the line?

Thanks!

[Michael Dumler]

@Steve Sauro Yes. Similiar to that of a traditional mortgage, a HELOC will require closing costs and can add up to anywhere from 2-5% of your total loan. Keep in mind, the lender is going to reassess your property to determine the value of the home. Your closing cost will most likely inlcude, an appraisal fee, underwriting fees, title fee, recording fee, etc. The question I have for you is why do you plan on getting a HELOC? Do you plan to use the the line of credit to purchase another investment property? Hope this helps!

[Steve Sauro]

Hello Michael - 

Thanks for the reply. There are 2 drivers for looking into the HELOC. I'd like the flexibility to have access to that cash for 3 potential situations (if the timing etc is right) 1) purchase/finance a new LTR/STR 2) buy outright a BRRRR 3) have a safety valve for college payments if 529 does not cover.

I'll have to give this more consideration since its a 'nice to have' rather than something that I actually 'need'  If I'm missing something or your have suggestions I'd love to hear them - if not here than message me directly please

Thanks so much