What are HELOC closing costs?

A home equity line of credit (HELOC) can be a relatively low-cost way to consolidate high-interest debt, help pay for educational expenses or fund home renovations by tapping into your home equity.

While HELOCs often have competitive interest rates, some lenders will charge upfront closing costs ranging from 2% to 5% of the total line amount. These costs are typically expressed as a percentage of your line amount, so if your closing costs are 3% on a $50,000 line, that would equal $1,500. This cost can either be paid upfront at closing or rolled into the HELOC balance – reducing the amount of funds immediately available.

However some HELOC lenders, like Citizens, cover the costs associated with opening a HELOC. Meaning less surprises between the time you view your initial offer and when you close.

Learn about typical costs that are associated with applying and closing on a HELOC and what you could do to minimize or avoid them entirely.

Common HELOC closing costs

HELOCs may include closing costs similar to those seen with home equity loan or mortgage closing costs. Here are some of the most common fees you might encounter:

• Application fees: This is a charge to process your HELOC application and begin the underwriting process.
• Appraisal fees: You may be charged the cost of obtaining an appraisal so the lender can determine your home’s current value.
• Credit report fees: You may encounter fees for pulling your credit report and score from one or more credit bureaus.
• Title search fees: These fees cover the review of public records to confirm clear ownership and the absence of unresolved liens.
• Notary fees: You may have costs to notarize key HELOC documents as part of your closing package.
• Legal fees: Fees related to legal review or document preparation required to open your line of credit may be included in your HELOC closing costs.

Some lenders also charge ongoing HELOC fees, such as annual fees or inactivity fees, so it's essential to review both your closing disclosure and your line agreement carefully.

How to avoid unnecessary HELOC costs

To help keep your overall HELOC costs as low as possible, consider these tips:

1. Compare HELOC offers, and look for a lender who does not charge for fees associated with the application, origination, or closing process. Keep in mind that the initial rate shown may change if the lender does charge for those fees.
2. Work with a lender like Citizens that may offer virtual or digital home appraisal options based on the property and loan details. Traditional appraisals can cost hundreds of dollars, while digital appraisal methods may help reduce or avoid appraisal fees.
3. Look for a lender with no upfront draw requirements. This flexibility lets you borrow only what you need and pay interest solely on the amount you use—not the unused portion.

Explore your HELOC options

Are you ready to discover if a HELOC is right for you? With a Citizens HELOC, there are no application, appraisal, origination, or closing costs*. That means no surprise fees between application and closing. See what you qualify for today with no commitment and no impact to your credit score.

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