Paying off your mortgage builds equity in your home. Whether it’s a home equity loan or a home equity line of credit (HELOC), you can access your equity when you’ve built enough equity over time. Using this method, you can pay for renovations, student loans, or anything else entirely, instead of depleting your savings.
Understanding the home equity loan process can help you minimize the risk of delays and speed up the process so that you will have access to your funds more quickly.
Find out how long it typically takes to get a home equity loan and what may slow things down.
Home Equity Loans: How Long Do They Take?
This question doesn’t have one answer. Every lender will tell you something different. In some cases, it can take months to get approval on a home equity loan. The timelines are flexible since they depend on many factors outside of your control, such as the valuation of your home and the underwriting process.
Process Of Obtaining A Home Equity Loan
Lenders typically follow a few basic steps.
1. Check Qualifications
To qualify for a home equity loan, you must meet a few requirements. Each lender has its own requirements.
2. Choose A Lender
When you meet minimum qualifications, shopping around for a lender is your next step. It could take a few weeks to get a response from lenders.
3. Submit Application
After selecting your lender, you can begin the application process. You will be asked about your income, property, and debt.
4. Get A Property Evaluation
A certified appraiser may be necessary to evaluate and inspect your property, but exact requirements vary by lender.
Upon completing your home equity loan application, an underwriter will review your financial profile, comparing it to the home equity loan requirements. An entire month may pass before your loan application is processed.
Closing is the last step. This stage involves finalizing the loan, signing paperwork, and arranging for funding disbursement with the lender. It usually takes a week or less.
Factors That Affect Timelines
The home equity loan timeline can be sped up or slowed down by several factors. It is common for closing dates to be pushed back to allow for document review, appraisal completion, etc.
Following are a few reasons why approvals may be delayed:
1. Insufficient Documentation And Application
Tax bills, income evidence, and mortgage statements may be required. It may take longer to process your application if these documents aren’t available.
Because of the detailed review of all financial and property information required, the verification portion typically takes the longest. At this time, the lender will examine your credit and debt-to-income ratios.
Providing any additional information you have may speed up the process if you’re concerned they’re having trouble checking any of these.
3. Home Valuation
Your lender will schedule the appraisal; this will verify the value of your house. Depending on the appraiser’s schedule, it may take longer than expected.
All final documents will be signed and delivered by a notary and your lender. A lawyer may need to be present if your state requires one. Scheduling around his or her availability may cause delays.
Taking a home loan route to home ownership? Before you get started, you need to keep in view some key considerations when applying for a home loan. Our guide can help you get started on the right footing.
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