So I just closed on a pretty decent HELOC deal from Citibank. Prime-4.01% for 6 mos, then P-.5% thereafter.
Only catch is an early closure fee (equal to their closing costs paid by them) if closed within 3 years of closing. In my case, it's a pretty sizeable HELOC, so given the discounted rate I'd "break even" after 1-2 mos.
My beef w/ them plays out as follows:
Several occasions up until closing I was told that their lender-paid closing costs that would be stipulated @ closing would be $679 (ie, this would be the penalty I'd later pay for early closure), which equates to "breakeven" after a merely 1 month.
Three times I requested a GFE and never received one (somehow I doubt it got lost in the mail 3 times)
At closing, whadda ya know, the closing costs are like $1175. Even after getting a supervisor on the phone (call got reverted back to U.S. from India) they wouldn't budge, explaining that closing costs are "only an approximation"
Seems like $1175 is not approximately $679 under even the laxest of standards
So, on one hand I still have a decent deal. On the other, relative to what I thought I was getting, it's like I just lost $500. (I still have every reason regardless to refinance on a new promo HELOC w/ somebody else in 6 mos.)
I doubt there's little I can do to salvage things. I suppose I have 3 business days to cancel, but since that's done via fax it's not like anything can be rescued. If I fax the cancellation, the deal will be off... right?
Only thing I can think of is if & when I close the thing say 6 mos hence I can attempt to recover the extra $500 by reading them the riot act, filing w/ regulators, small claims court. Since I never got the GFE (really!) that could either help or hurt me (I even asked / offered to pick one up @ branch w/ no luck).
Any other angles?
I just can't believe they think it's OK to be this sloppy.
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Not neccesarily. My lender paid closing costs were about $500 for this deal. If my closing costs were as high as the OP's, I probably would have canceled myself.
Chuzzlewit, you're right, paying closing costs is rare on HELOCs. The costs I'm discurring are the LENDER-paid at closing, stipulated explicitly at closing (as they always are regardless of who's paying). The point is that these fees comprise the "penalty" I will pay BACK if I TERMINATE within 3 years.
Slimcustomer, yes State plays into it (I say this only because I heard them say things like "let's see you're in California and the loan amount is $X so your closing costs that you'd owe back would be $679". So, state and amount of either line or draw play into it those costs at least.
there are typically MANY simple ways around the early cancellation penalty, the most common being asking for a 5-10k higher new HELOC line from the same issuer...
they typically cant modify an existing line and just write up a whole new loan and often wont assess the prepay if youre going with the same lender
I got the same deal... my closing costs were $375 as stated in the contract.
What OP is referring to is that is you cancel HELOC (find a better deal out there and move your money) they it says you have to reimburse lender for the closing costs. The closing costs were originally advertised to be roughly $350 but may vary. BTW, I never got a GFE from them, don't think that HELOCs will give you a GFE but I've only had experience with 2.
OP - in the state where you live, are there county/state recording fees? Maybe the closing costs have that included?
Whether to cancel or not - depends on how much you've borrowed and if you think you will really close that line within 36 months. If your HELOC draw amount is huge, then i guess you would jump for a Prime -.75% deal in the future.
You've signed the papers already right? That is legally binding. I would try to call them back before the 3 days are over and make headway on this now.
didyousearch, that's actually a great piece of information. I could flip the loan into a larger line (under pretext of home remodeling budget exceeding current line or something) and then close it, eliminating ALL the penalty. That's gold if it works.
bhupeshm, I've already beaten the horse till it's dead w/ them.
The deal is STILL worth doing even w/ the higher-than-expected penalty. I could try to call prior to the 72 hours under threat of cancel, but I imagine it would be really difficult for them to turnaround any kind of rider letter before the 72 hours is up - especially on a penalty that is "hypothetical" to begin with.
Btw, I myself HAVE received GFE on 2 previous HELOCs. Even Citibank said they would send one. Somebody else chime in if they know if by law lender is required to provide GFE for any kind of mortgage (1st, HEL, HELOC, ...). Their closing cost document does include recording fees broken out explicitly.
It's a $200K HELOC, so yes, I really will refi it in 6 mos. I'm expecting that as rates rise further we'll see even more promo rate deals like this one.
this may be a little off topic, but we did apply for the HELOC at citibank at prime - 4.01% x6months. The early closure fee isn't such a problem for us since it's a great deal.
But what we're worried about is how long it takes for them to approve..the whole process before we get to draw from the credit line. We applied about two weeks ago and their reason for the delay is that they need to verify our employment. But all they need to do is call a number and it'll be done within 5 minutes.
I was wondering what kind of experience did you have with them? How good are they on scheduling the closing...do they actually come to your home for that? Thanks in advance.
They'll send a notary anywhere you want to execute (I did it @ my office).
I was a little befuddled by how long it was between closing (when the meter starts for interest) and when the old lender got taken out (seemed like it was near 2 calendar weeks).
I closed on a Friday - am thinking Tuesday might be better (not Monday, because I think a Monday close means they'll fund on Friday in preparation)
can you tell me the approximate time it takes for their approval? ..we really need the money asap and are a bit anxious. also, how much time did the entire process take from when you first applied to when they give you the checks? thanks!
helocs today offer no closing costs heck they even pay for your appraisal. citi and chase offer this but majority of the time your credit scores must be 720+ for the best rate. more and more lenders are following suit - check your local bank. if you got charged cc it's probably because you worked with a greedy loan officer or your credit wasn't that great. I sometimes charge clients 1k in cc for heloc's just because I can heloc fees are maxed out at about 5% for LO's & we get paid from $400 to $1,500 from the lender.
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heloc fees are maxed out at about 5% for LO's & we get paid from $400 to $1,500 from the lender. 
