It’s possible to take out a HELOC with few or even no fees. Unlike other home loans, home equity lines are often designed to work more like a credit card. You only pay interest when you withdraw money and you aren’t stuck with a lot of unnecessary charges for taking out a line.

However, in some cases paying a small annual fee could result in overall savings, depending on how you choose to use your HELOC.

The Street reports:

“Many of the fees associated with a HELOC should be avoided, such as an application fee, an appraisal fee, and a “non-usage” fee charged for leaving the money in your line of credit untouched. (The non-usage fee is particularly disagreeable, since one of the main benefits of a HELOC is its usefulness as a safety net in case of emergencies.) But the decision to choose a HELOC with an annual fee depends on whether it offers a better interest rate than non-fee loans and how frequently you plan on withdrawing money.”

Take a look at their article for suggestions on how to determine if an annual fee line would pay off for you, or if you’d be better off with a no-fee HELOC.

photo credit: Medmoiselle T

See Also:

How to Negotiate the Best HELOC Rates and Terms

10 Questions to Ask Your HELOC Lender

Tags | annual fees, Heloc, heloc fees, home equity line of credit