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Typically, your lender can take two to six weeks to process and approve your application for a home equity loan. But keep in mind that the exact amount of time it takes varies depending on the lender, your financial situation and how quickly you can get the paperwork together.
Home equity loans and home equity lines of credit (HELOCs) are both ways to obtain cash while borrowing against the value of your home. But while HELOCs open up a line of credit for ongoing use, home equity loans offer a cash lump sum.
Not every part of the application process is in your hands, but there are some steps you can take to make sure you get your approval as soon as possible.
Know your credit score, your debt-to-income (DTI) ratio and the loan-to-value (LTV) ratio of your home to help you match with the right lender. Home equity lenders usually require the following:
Having your documentation ready before you apply can help streamline the process. Lenders typically ask for the following documents:
Make sure your application is as accurate as possible. Any errors could delay the process or — worst case — end in a failed application.
Most lenders require a certified appraiser, but clarify what kind of appraisal your lender needs. Also, check whether they’re responsible for the appraisal or if you need to set up the appointment. If you’ve had a recent appraisal done, ask if the lender will accept that report for use in your underwriting.
Underwriting is the point in the process where the lender verifies your documentation and compares your financial stats to the loan requirements. Each lender’s underwriting process is different, but this can take up to four weeks — and all you can do is be patient and wait.
A notary will meet with you to sign, seal and deliver the documents. Some states require an attorney to be present when the deal closes.
The following are several factors to watch out for as you move through the process:
Some banks advertise speedy HELOC approvals, such as Figure — which claims it can fund its HELOC in as few as five days. But overall, HELOCs and home equity loans have the same general timeline, with approval times averaging two to six weeks.
Use our tool to get personalized estimated rates from top lenders based on your location and financial details. Select whether you’re looking for a Home Equity Loan, HELOC or Cash-Out Refinance.
If you selected a home equity loan or HELOC, enter your ZIP code, credit score and information about your current home to see your personalized rates.
In the Cash-Out Refinance tab, select Refinance and enter your ZIP code, credit score and other property details to see what you might qualify for.
Exactly how long it’ll take to get your money after approval depends on the lender. However, when your home is on the line as collateral, federal law requires a three-day waiting period to allow you to cancel the loan even after signing the credit contract. So, the typical turnaround time for the cash to hit your account is about four days.
Being prepared is important, but with your home on the line, getting a HELOC shouldn’t be rushed. Some lenders advertise shorter approval times than the standard two to six weeks.
But that shortened timeline often comes with trade-offs, such as higher fees or big draw requirements. Take the time to shop the market for a lender to ensure you find the best fit for your situation.
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