If you have a home equity application or are planning to apply, one of the things you want to know about is how long it will take. Processing will, of course, depend on how complex your loan request is; however, it will typically take anywhere from two to four weeks.
What Happens During the Application Process?
Although the time for the application to be completed can vary from one person to another, the process is frequently the same for everyone. During either the home equity line of credit (HELOC), Reverse Mortgage Line of Credit or home equity loan process, you will have to work with the loan underwriter. He or she will review your credit score and other items under your financial profile.
The loan underwriter will also compare your application to the requirements of the loan. The procedure may include verification of the documents you have provided, such as your financial information. Property valuation is also a part of the whole process. You may also be required to provide additional documents or details, such as.
- Income verification or pay stub.
- Most recent tax returns for self-employed applications.
- Deed of the property (copy).
- Tax assessment.
- Trust agreement (for some applicants).
- Mortgage statement.
If you are consolidating debt, you will need to provide a list of payoffs. With many documents required, it is best to get organized prior to the application process. When you have all the needed papers ready, it will help simplify the entire procedure.
How Much Equity Do You Need?
To qualify for a home equity loan, you first need, well, equity. This is the difference between what you owe and the value of your home. The mortgage company complete an appraisal, though likely only a drive-by, in order to verify. Lenders typically only approve up to 80%, so if your home value is $250,000 and you owe $120,000 (48%), you’d be able to borrow up to $80,000.
The Waiting Period
Although applications are normally approved at least after two weeks, the loan underwriter often sends a letter within three business days. This letter is about the primary credit decision and the terms if ever the application gets the approval.
The appraisal typically follows in which the lender or the bank will assess the home, particularly its current value. This process is crucial for the organization to determine how much equity you have. Finally, it is closing time when the lender reaches out to you to tell you that your application has been approved.
The closing date will then be scheduled. The lender will ask you (along with your co-applicant) to visit the preferred branch so you can leave your signature on the agreement. Even after the closing, you have three business days to go over the documents.
At this time, you can decide whether or not you will open the line of credit without obligations. An exception is if you use an investment property to secure the HELOC. Once you have made your decision, you can now access the funds when you visit the branch, get an online check, or through an online transfer.
The entire process is easy enough, but valuable resources like Home Equity Wiz and other similar home equity sites can be useful for answering frequently asked questions. They are also helpful for finding reputable lenders to ease your mind as well.