It can take two to six weeks or longer to get a HELOC. Underwriting and processing times vary by the lender, so your time frame may be longer or shorter. Fortunately, there are steps you can take to speed up the process.
This year, cash-out refinancing—which was all the rage in 2021—is not as prominent since borrowers are choosing against it due to rising interest rates. 2022 will see the home equity line of credit, or HELOC for short, take its place as the most popular borrowing option. HELOCs may be an option for homeowners seeking a lump sum of cash at relatively low interest rates.
Unfortunately, getting approved for a HELOC can be a weekslong process. If you cant wait that long, exploring other ways to borrow might be best. Let’s examine the duration of the HELOC application process in more detail and discuss possible ways to expedite it.
So you’re thinking about tapping into your home’s equity with a HELOC? That’s a great idea! A HELOC can be a fantastic way to access cash for a variety of needs from home renovations and debt consolidation to unexpected expenses and educational costs. But before you jump in, you might be wondering: how long does it actually take to get a HELOC?
The good news is that the process can be relatively quick typically taking around 2 to 6 weeks from application to approval. However the exact timeframe can vary depending on several factors, including:
- The lender you choose: Different lenders have different processing times, so it’s important to shop around and compare.
- The complexity of your financial situation: If you have a complex financial history, the underwriting process may take longer.
- The availability of documentation: The faster you can provide the lender with the required documents, the faster the process will move.
Here’s a breakdown of the typical HELOC timeline:
- Application: This is where you provide the lender with your personal and financial information. The application process can be completed online, in person, or over the phone.
- Pre-approval: Once you’ve submitted your application, the lender will typically provide you with a pre-approval within a few days. This gives you an idea of how much you may be able to borrow and what your interest rate might be.
- Underwriting: This is where the lender reviews your financial history and verifies your information to determine your eligibility for a HELOC. This process can take anywhere from a week to 30 days or longer, depending on the complexity of your financial situation.
- Closing: Once you’ve been approved for a HELOC, you’ll need to sign the loan documents and finalize the details. This process typically takes place in person at the lender’s office.
- Funding: Once the closing is complete, the funds from your HELOC will be deposited into your account, usually within a few days.
Here are some tips for speeding up the HELOC process:
- Gather your documents in advance: This includes your pay stubs, tax returns, bank statements, and mortgage statements.
- Choose a lender with a fast processing time: Ask about the lender’s average processing time before you apply.
- Be responsive to the lender’s requests: The faster you can provide the lender with the information they need, the faster they can process your application.
- Consider a lender that offers an automated valuation model (AVM): An AVM can provide an instant estimate of your home’s value, which can save you time and hassle.
Remember, even if the HELOC process takes a few weeks, it can be well worth the wait. A HELOC can be a valuable financial tool, providing you with access to cash when you need it most.
Here are some additional resources that you may find helpful:
- Experian: How Long Does It Take to Get a HELOC?
- CU SoCal: How Long Does It Take to Get a HELOC?
P.S. If you’re looking for a fast and easy way to get a HELOC, I recommend checking out CU SoCal. They offer a streamlined HELOC process with competitive rates and terms. You can learn more about their HELOCs on their website.
What Can You Do to Speed Up the HELOC Process?
If you need faster access to a HELOC, consider taking the following steps to accelerate the HELOC process:
- Shop HELOC lenders for faster timelines. Since each lender has a different underwriting and processing time, shop around and compare lenders to find one with a quicker turnaround time. Of course, you want to make sure that the low monthly payment and low interest rate are both being offered to you. Recall that variable interest rates are a feature of HELOCs, meaning that your rate may rise over time.
- Look for a lender that doesnt require a home appraisal. As previously indicated, a certified appraiser’s evaluation of a home may take several weeks to finish. Thankfully, a lot of lenders employ automatic valuation models (AVMs), which have the ability to employ market-analyzing algorithms. You can save a significant amount of time by using an AVM to quickly generate an estimated home value. Prior to applying, find out which HELOC lenders offer an AVM as you compare them.
- Dont apply with a co-applicant. If you’re short on time, you could apply for a home equity loan (HELOC) in your own name rather than co-borrowing with your spouse. If there is another borrower on the loan, underwriting and processing will take longer for the lender.
- Have your documents in order. Lenders require time to review supporting documentation for the data you submit on your application. To verify your income, they will, for instance, need to see your most recent pay stubs. If you scan your documents and attach them to your online application instead of mailing them, you could expedite the process.
Submit Your Application
If you have your prior step’s information and documents on hand, you should be able to finish your application in a single day. Once complete, a lender representative may contact you to discuss your application within three business days.
To ensure a smooth process, you should send the documents your lender requests as soon as possible. They may advise you on which ones to send.
Estimated completion time: Three days
The next step is the underwriting process, which is the lender evaluating your creditworthiness to see if you qualify for a home equity loan. Your eligibility will depend on several factors, such as your income, credit score, and debt-to-income (DTI) ratio. Be aware that the underwriting process could take up to a month to complete.
Estimated completion time: 30 days
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FAQ
How long does it take for a line of credit to be approved?
How long does it take to receive equity?
Why does it take so long to get an equity loan?
How hard is it to get an equity line?
How long does a home equity line of credit last?
Once you’re approved for a home equity line of credit, the draw period starts. This first phase usually lasts for 10 years, and you can borrow as much cash as you want each month up to your credit limit. To make withdrawals, you’ll use checks or a card you can swipe.
How much equity can you borrow from a home equity line of credit?
You can usually borrow up to 85% of your equity, though this varies by lender. You can draw from a home equity line of credit and repay all or some of it monthly, somewhat like a credit card. Unlike a credit card, however, HELOCs are not intended for minor expenses.
How do I calculate my estimated line of credit for a HELOC?
To calculate your estimated line of credit for a HELOC, you will want to use the following calculation: Multiply: (Your home’s value) ✕ (your lender’s loan to value percentage (LTV)) = maximum amount of borrowable equity. Subtract: (Maximum amount of borrowable equity) − (what you currently owe on your mortgage) = your HELOC credit limit.
What is a home equity line of credit (HELOC)?
A home equity line of credit is separate from the mortgage on your home (if you have a mortgage). With a HELOC, you’ll have access to a set sum of money that is structured as a revolving line of credit. You use only what you need and make monthly, interest-only payments.