How Long Does a Home Equity Loan Take to Close?

Taking out a home equity loan allows homeowners to tap into their home’s equity to get cash for home improvements debt consolidation, or other major expenses. While a home equity loan can provide funds when you need them, the loan process does take some time from application to closing. Here’s an overview of the timeline and what to expect as you go through the home equity loan process.

Typical Home Equity Loan Closing Timeline

The typical timeline for closing on a home equity loan is 2-6 weeks from the time you apply until loan closing. However the exact timeline can vary quite a bit depending on your specific situation.

Here is a look at the typical stages and timeframes

• Application (Days 1-5) – You’ll need to fill out an application with information about your finances, income, debts, and home value. The lender will review your credit report and other documentation to determine if you prequalify.

• Home Appraisal (Days 4-14) – The lender will order an appraisal to verify the home’s value. It usually takes 1-2 weeks to schedule and complete the appraisal.

• Loan Processing (Days 5-20) – The lender will verify your income, debts, creditworthiness, and collateral. Any issues will need to be resolved before moving forward.

• Loan Approval (Days 10-30) – Once processing is complete, the lender will make a final decision on approval. You’ll receive a Loan Estimate outlining the costs.

• Closing Disclosures (Days 25-40) – At least 3 days before closing, you’ll get your final Closing Disclosure with final terms.

• Closing (Days 30-45) – You’ll review and sign final loan documents. The lender will then disburse the loan funds, usually within a week of closing.

So in total, expect 2-6 weeks from application to funding, with most loans closing within 30-45 days. However, it can take longer if issues come up during processing or if you have a complex situation. The more responsive you can be in providing documentation, the quicker the process usually goes.

Factors that Impact Closing Time for Home Equity Loans

While 2-6 weeks is typical, several factors can cause a home equity loan to take longer (or shorter) to close:

• Your credit and financial profile – Borrowers with higher credit scores and steady income tend to close faster. Weak credit or complex income sources add time.

• Loan program requirements – Government loan programs like FHA loans have more requirements, adding 1-2 weeks. Conventional loans are faster.

• Appraisal delays – Backlogs due to high loan demand can delay appraisals 1-3 weeks. Rural properties also take longer.

• Your responsiveness – Delayed responses to lender requests for documentation can prolong timelines. Staying on top of requests reduces delays.

• Title issues – Problems with your home’s title must be resolved before closing, which can add weeks to the process.

• Lender workloads – Some lenders close loans faster than others. Shop around for best timelines.

• Loan amount – Larger home equity loans generally take longer to underwrite and process.

• Property type – Loans for condos, co-ops, or multi-family homes often require more time.

• Time of year – Home buying season (Spring/Summer) leads to busier lenders and delays. Fall/winter tends to be faster.

Steps You Can Take to Speed Up Closing

While you can’t control all the factors that affect home equity loan timelines, here are some tips to help expedite the process:

• Shop lenders and compare timelines – Some lenders are simply faster than others. Ask about typical timeframes.

• Get pre-approved – Going through pre-approval upfront can shorten the process by 1-2 weeks.

• Prepare all required documents – Having pay stubs, tax returns, and other paperwork ready avoids delays.

• Respond quickly to lender requests – Return forms and documentation within 24 hours to keep things moving.

• Avoid major purchases or changes – Major new debts or job changes can slow approval.

• Schedule your appraisal ASAP – Having this done early gets the ball rolling.

• Opt for eSignatures – Using eSignatures for documents speeds up the signing process.

• Stay on top of your lender – Politely follow up to ensure nothing falls through the cracks.

How Long Does It Take to Close Once Approved?

Once your home equity loan is approved, the final closing process typically takes 1-2 weeks. Here are the key steps in the final week or two before closing:

• You’ll receive your final Closing Disclosure 3 days before closing for review. This outlines the final loan terms.

• Your closing agent will contact you to schedule the closing appointment based on the date outlined in your disclosures.

• At closing, you’ll sign the final loan documents and the closing funds will be disbursed.

• Any remaining funds owed will be collected from you at closing if you’re rolling closing costs into the loan amount.

• Within 1 week of closing, the funds are usually deposited into your bank account by the lender.

So in the final stretch, be flexible with your schedule to accommodate the closing appointment. Then once you sign, it’s a matter of days before the funds are available to you.

Tips for a Smooth Home Equity Loan Closing Process

To keep your home equity loan closing on track, here are some final tips:

• Clear your calendar and be available to sign final papers when needed. Last-minute delays can push back closing.

• Thoroughly review your final Closing Disclosure and note any changes needed. Verify fee totals and loan terms.

• Confirm the closing location and bring proper identification and any funds you may need to provide.

• If using eClosing, test your eSign login before your appointment and ensure it works properly.

• Bring your insurance information – you’ll need to show proof of homeowners insurance.

• Ask your closing agent to explain any documents you’re unsure about before signing. Don’t feel rushed.

• Keep records of all signed documents for your records. The lender will provide copies as well.

• Lock in any rate lock period offered by your lender so your rate doesn’t expire before closing.

Following these tips and timelines will help your home equity loan closing go as smoothly as possible. Maintain open communication with your lender and real estate professionals throughout the process. Before you know it, your loan will be closed and funds disbursed so you can move forward with your plans.