Understanding HELOC Costs & Fees

Couple discussing their HELOC costs and fees

Key takeaways

You may have to pay closing costs with a home equity line of credit (HELOC), such as origination, title search, and credit report fees. Your lender may roll these costs into your loan balance or require you to pay them upfront at closing.
Other fees associated with a HELOC include maintenance, early termination, and inactivity fees.
When considering a HELOC or another type of home equity financing, make sure you understand different types of closing costs and fees and how much you may be expected to pay.

Please note: Discover® Home Loans offers a home equity loan product but does not offer HELOCs or purchase mortgages.

There may be certain closing costs and fees with a HELOC, which is a revolving line of credit that lets you borrow against the equity in your home.

HELOC closing costs and other fees can vary depending on the lender, the rate product you choose, and other factors. If you dig into the details and compare lenders, you may be able to get a better idea of how much everything will cost.

Below, learn more about the different types of HELOC costs and fees.

HELOC closing costs

Closing costs aren't just for purchase mortgages used to buy a new home. Many HELOCs also come with closing costs, such as origination, recording, and credit report fees.

Lenders may charge closing costs to cover the expenses associated with processing, underwriting, and facilitating a HELOC and other tasks. These costs may also pay for third-party professionals involved in the HELOC process, such as appraisers and title agents.

Common HELOC closing costs include:

Application fee: Your lender may charge you a fee when you submit an application for a HELOC.
Origination fee: Lenders often charge a fee to cover the costs of processing a loan. This may be a flat fee or a percentage of the loan amount.
Notary fee: Some lenders charge a fee for a notary public to verify and witness the signing of loan documents.
Title search fee: A title search, which you may have to pay for, helps the lender confirm you have rightful ownership of your property and there are no taxes owed or other issues with the title or property.
Appraisal fee: You may have to pay an appraiser to determine the current market value of your home.
Credit report fee: Lenders typically run a credit check when reviewing your application, which may incur a charge.
Document preparation fee: This is a fee your lender may charge for preparing loan documents.
Recording fee: Your lender may require you to pay a recording fee, which covers the cost of entering the lien on your property into the public record.

As you review your loan options, keep in mind different lenders may not charge the same type of closing costs. Also, some lenders may waive certain fees as part of a special offer or roll costs into the balance of your loan.

Discover® Home Loans offers low, fixed rates on home equity loans up to 90% CLTV as an alternative to variable rate HELOCs.

Other HELOC fees

As well as closing costs, a line of credit like a HELOC may have fees you won't find with other types of loans.

For example, you may need to pay a draw fee whenever you borrow funds from your credit line. This is different from a home equity loan, which doesn't have draw fees because it provides an upfront lump sum payment. Discover Home Loans offers home equity loans with zero application fees, zero origination fees, and zero cash due at closing.

Here are some other possible HELOC fees you should know about:

Annual fee/maintenance fee: Some lenders charge an ongoing fee to cover the costs of managing your HELOC.
Early termination fee: Your lender may charge you a fee for closing your HELOC before a specific amount of time has passed.
Inactivity fee: You may pay a fee if you don't use your HELOC for a certain period.
Fixed-rate conversion fee: HELOCs typically have variable interest rates that may go up or down depending on the economy, market conditions, and other factors. A borrower may be able to convert some or all of their variable-rate HELOC into a fixed-rate one; however, there may be a fee for doing so.

Depending on the terms of the loan, there may be a minimum withdrawal amount required each time you access funds from a HELOC.

HELOCs vs. home equity loans

If you're deciding between a HELOC vs. a home equity loan, make sure you understand the closing costs and fees associated with each loan type.

If you want the flexibility to tap into your home equity multiple times for recurring needs, then a HELOC may be a good option. But if you have a one-time expense, such as a major home improvement, a home equity loan may be a better idea as it offers a lump sum payment.

Check out the latest home equity loan rates from Discover to see if a fixed-rate instalment loan is the right choice for you.

Main: The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Capital One, N.A. or its affiliates.

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We do not lend in IA or MD. You are not guaranteed approval. Once you apply and submit your credit and property information, we will confirm your eligibility. We don’t lend on cooperatives, condotels, investment properties, log homes, manufactured homes, mobile homes, or secondary homes. We will only originate one 1st lien mortgage per property per 12-month period. The maximum loan amount you qualify for will depend on additional factors, including type of loan, lien position, loan-to-value and your credit history. We may change rates, program terms, and conditions without notice. Discover Card accounts and other Capital One accounts (with the exception of Discover home and personal loans) may not be paid off with this home loan. All loan programs are offered by Capital One, N.A., 2500 Lake Cook Road, Riverwoods, IL 60015. NMLS ID 453156.