finance charge on home equity line?
Hi, I took a 80/15/5 loan to purchase my primary residence. Just received my first statement on the second mortgage and it shows a finance charge that is ADDED to the balance. I arranged this mortgage through a mortgage broker, she never mentioned anything about these finance charges. Are these finance charges typical with 2nd mortgages? what is a reasonable value for such charges? How do I get out of this finance charge? Do I have anything on the mortgage broker for failure to disclose these charges? I saw the loan documentation only at closing! Thanks, Mohamed
Public Comments
- The finance charge is the interest that has accumulated on your account. Equity Lines are similar to credit cards-- There are billing cycles. Most likely your HELOC accrues daily interest. All of that daily interest gets added to your account on the closing date of your billing cycle. This brings your balance up. If you pay your monthly payment in the same billing cycle, then that payment makes your balance go down. Example: Last balance: $30,000.00. Interest accrued in 25 days = $150.00 brings your new balance to $30,150.00 but then you make a payment of $200.00 so your new balance will be $29,950.00 Unfortunately, there is no way out of this finance charge, unless it was an interest free loan (very very unlikely)
- You don't provide enough information. Read the mortgage documents to determine your obligations on them. It is up to you to know what you are signing, and if the mortgage broker did not explain everything it is your fault for not asking questions. Maybe the finance charge you mention is the interest on the loan. This is a real estate transaction so nothing verbal has any significance. You have no recourse to the broker for not telling you something that is in writing and you signed. You should read the documents before signing them, and if something in them is not clear, you should have it clarified so that you understand what you are signing. If the finance charge is legitimate, you can get out of it by paying off your mortgage.
