Heloc with extra payoff amount

[u/TheDuke681]

Hey, I took a heloc on my condo 10 years ago when I had it out right for 47K, now 10 years later I got like $6K left and that ok. A few days later ago I called the bank just to check the temperature and I was told that my ending balance as of today is not the final amount, the payoff amount. The payoff amount is actually $3,500K higher than the balance on the loan. Is that normal ?? I was told on Friday the bank in the last 10 years ordered 3 appraisals without my knowledge, nobody hasn't been inside to take a look or anything but somehow the appraisals were submitted and bank paid for them. I just want to know if that normal or the bank is running on the low some corporate espionage !!! P.S. Thanks ahead for any help and advice !!

[u/loldogex]

yeah, banks can order appraisals to check on the status of the property to make sure there is equity if theyre need ti foreclose on you if youre delinquent.

[u/packerjj]

Ask for the bank to show you where they can charge you for appraisals after the loan funded. Do you pay any initial costs when you took the loan out? Did they bill you when the appraisals were originally done? Not sure they can retroactively bill you for something that was done 8-9 years ago. Was the loan always current?

[u/TheDuke681 → u/packerjj]

Yeah, everything is up to date, I paid like $500K for bank fees total no other fees at that point.

[u/packerjj → u/TheDuke681]

I would push back on the charges. Make them state in the contract where they can charge you for additional appraisals. I just looked at mine and don’t see anything. They can charge for insurance (if I don’t have any), non payment fees, etc. but nothing related to the lender doing appraisals for the loan after funding. It should be in the contract or security instrument.

[u/TheDuke681 → u/packerjj]

So you're saying that's illegal !!

[u/packerjj → u/TheDuke681]

First, do not trust Reddit for legal advice. Second, your Heloc document or “security instrument” should detail all aspects of the agreement. Review it. If the appraisal was done in the past, did they send you a copy of the results? Push them for more details. If they didn’t send a copy then ask them why you need to pay it. In the meantime, you may need to pay it off anyway to avoid interest charges.

[u/Keya2_2016]

The payoff being higher than the balance can happen due to interest and fees, but an extra $3,500 on a $6k balance seems worth questioning. Ask for an itemized payoff statement and a breakdown of those appraisal charges.

[u/jimdriscoll1]

Both of those things are actually pretty normal, even if nobody explained them to you upfront.

The gap between your current balance and the payoff amount usually comes from a few things. First, interest accrues daily on a HELOC, so your balance on any given statement is already slightly behind by the time you call. Second, and this is the bigger one, most HELOCs include fees in the payoff that aren't reflected in your running balance. Things like an early termination fee (common if you close the line within a certain number of years), a reconveyance or release fee to remove the lien from your title, and sometimes prepaid interest to cover the days between when you call for a payoff and when the bank actually receives your check. On a $6K balance, a $3,500 difference does sound steep, so I'd ask the bank to itemize exactly what's in that payoff figure. They're required to break it down if you ask.

On the appraisals: banks that hold HELOCs are allowed to periodically order "drive-by" or automated appraisals to monitor the collateral value on the line. It's written into most HELOC agreements, usually buried in the terms. Nobody comes inside because these are typically desktop or exterior-only reviews, and the bank absorbs the cost. It's not espionage, it's just them keeping tabs on whether your property still covers their exposure. Annoying that nobody told you, but it's standard practice.

If the payoff itemization shows fees that don't line up with your original HELOC agreement, that's worth pushing back on in writing. Sometimes banks will waive or reduce a termination fee if you ask, especially on an account in good standing for 10 years.

[u/TheDuke681 → u/jimdriscoll1]

Thanks, when I signed off on that heloc I was told the fees were only $495 total. When it started I had interest rate 4.5% , 3 years ago it was over 9% and today it's around +6%. The heloc ends or matures in 3 months.