Do home equity lines typically have prepayment penalties?
Yes, many home equity lines available today do have prepayment penalties. However most penalties apply only if the home equity line is both paid off and the account is closed to further cash draws or advances. Therefore, if the home equity line is paid down to a zero balance, but is left open to future draws against the account, the penalty would not apply. In those instances where a home equity line borrower chooses to both pay off and close the account, the prepayment penalty normally imposed amounts to about $500.
