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How long does it take to get a home equity loan?

It’s not an instant process, but typically takes less time than a standard mortgage.

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.

How to speed up the approval process

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.

Eligibility

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:

  • At least 15% to 20% equity
  • An LTV of at least 80%
  • At least 620 credit score, but the best rates are available to scores of 740+
  • A DTI of 50% or lower, with 43% as the sweet spot
  • Ability to repay based on income, assets, monthly expenses and credit history

Documentation

Having your documentation ready before you apply can help streamline the process. Lenders typically ask for the following documents:

  • Copy of the property’s deed
  • Most recent pay stub
  • Tax returns from the last two years
  • Mortgage statement
  • Trust agreement documents, if applicable
  • Proof of residency

Application

Make sure your application is as accurate as possible. Any errors could delay the process or — worst case — end in a failed application.

Home appraisal

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

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.

Closing

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.

3 factors that can slow down your approval time

The following are several factors to watch out for as you move through the process:

  1. Low credit score. A low credit score could slow down the underwriting process, which is when lenders determine whether you’re eligible for a loan. If your credit score is between 620 and 700 on the FICO scale, it could signal that a more in-depth review of your financial history is required. A credit score lower than 620 may outright exclude you from being approved.
  2. Missing documentation. If you either can’t find or don’t have the documentation your lender requires, you may be delayed while you track it down and have it sent to you.
  3. Trouble with the appraisal. The appraisal required may differ by the state where you live or the lender you choose. Most lenders will schedule the appraisal for you using a company they trust. But if it’s left to you, be sure to schedule it as soon as possible and that the appraisal meets the bank’s expectations.

Is approval faster on a HELOC?

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.

Compare interest rates for home equity loans, HELOCs and cash-out refinancing

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.

How soon after approval can I receive funding?

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.

Bottom line

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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