How long should an average homeowner expect to wait for processing a home equity loan or a home equity line of credit (HELOC)? The answer to that question depends on a few factors but generally is in the range of two to four weeks for the majority of applicants. That’s the time it’ll take from filling out the application to receiving your funds or approval for the line of credit for a HELOC.
But what are those “variable factors” that make the difference? Essentially, it’s the complexity of the situation. That umbrella category includes things like your credit scores, payment history, income, whether you’re self-employed, your age, how much equity you already have in the house, and whether you have all the documentation ready to go at application time.
The process of approving or not approving a loan application involves several important tasks for the underwriter. Each task takes time. To begin, the underwriter looks at your entire financial profile to see if it matches the criteria for loan approval in general. Next, some applications will need to have financial data verified. For all loan types, the lender will need to collect some documents and sometimes they will have to obtain a professional property valuation.
Depending on the lender, you might be asked to hand over some documentation, like the property deed, tax returns and schedules for the past two years if you are self-employed, any trust agreement documents, paycheck stubs or similar income verification paperwork, proof of any extra income you listed but which does not show up on your tax returns, any debt-consolidation pay-off lists if applicable, a current mortgage statement that includes payoff balance, a recent assessment of tax liability on the property, and more.
Know What You Need
Glance at the listing above and decide which of those documents pertains to you, even consult a Home Equity blog. For example, if you’re not self-employed, not in debt consolidation, don’t list “extra income” on the application, and don’t have a trust agreement, then your documentation needs will be minimal. That typically will put your processing time on the low end of the two-to-four-weeks spectrum.
Even in simple situations like that you should go ahead and collect all the items on the list before applying for the home equity loan or HELOC. That way, when the lender asks you for the standard documents, like tax returns and a current mortgage statement, you’ll have them in hand. That will cut down on the amount of work the underwriter has to do. Translation: you’ll get a decision on your loan application relatively quickly.
Applicants with more complicated situations can also speed things along by having all the paperwork ready to hand over to the lender at application time. Even though a complex loan application will take more time, you’ll be ahead of the game if you have every document ready to go. Finally, it’s wise not to “check in” with the lender until at least two or three weeks have passed. At that time, a quick phone call or text, asking, “How’s my application coming along?” is all you should convey.
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Founder Dinis Guarda
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