How Long To Get Home Equity Loan USA 2021
How Long To Get Home Equity Loan?
Well, there is no specific time limit that will tell you how long to get a home equity loan. Many factors can affect the home equity loan approval and when your loan is approved, it still might take some time to get the funding in your hand. Averagely, it could take 2-6 weeks to get a home equity loan.
In 2-6 weeks most closings happen but sometimes some outside factors can delay the process of getting a home equity loan approved. Even when you are still paying off your mortgage, one can still apply for a home equity loan if few conditions are met.
While thinking about the home equity loan few questions always surface in the borrower’s mind. How Long to get a home equity loan when you need urgent cash? Which is a better home equity loan or HELOC ( Home equity line of credit )? can you apply for a home equity loan while paying off the mortgage? Or what documents or qualifications one should have to get a home equity loan?
In this article, we will answer all your questions and more. Even though we have provided you an average timeline that doesn’t mean it is accurate. If you are eligible and all your documents are ready, a home evaluation is done quickly and there is no bad credit or anything then you might get the approval on home equity loan early maybe in a week or two.
However, if you fall short in every area and don’t have a stable income and your credit score is below average then it could take months to get the approval on a home equity loan. There are also chances that you might not get the exact loan value of your equity.
Factors Affecting The Approval Time?
Before applying for a home equity loan, you must visit multiple lenders and choose the best one to fulfill your needs. People mostly take home equity loans when they don’t want to touch their savings or they don’t have one. A home equity loan can be used for several purposes need to renovate the house, student loan, unforeseen expenses, and so on.
Some people prefer HELOC over home equity loans as it opens a line of credit for the borrower and allows them to use it as they see fit from time to time. But if you are in urgent need of cash then a home equity loan can give you the lump sum amount of cash against your home equity value.
When you ask a lender how long to get a home equity loan, their answers will differ because many factors can affect the approval timing to get a home equity loan which is as follows:
The Application Process- The application process can be a bit tricky or might consume some time. Most of the home equity loan applications needed a copy of your current mortgage papers, proof of regular and stable income, documents of the property tax bill. If you are thinking of applying for a home equity loan. Keep all these documents in hand to make the process quicker.
The Verification- Well, it is normal to take the verification process some time and you can’t hurry it up. Lenders will verify all the information and documents you have provided in detail and more before granting you the fund against your home equity. They might also check your Credit score, DTI or Debt to Income Ratio, and property debt.
If all things check out with a green flag, you will get your home equity loan sooner than expected, and if not then they could delay the process intentionally before reaching any decision. So please make sure that all your information is accurate and don’t hide anything from your lender that can negatively affect your application.
Home Evaluation- once the verification process is done successfully, the lender will verify the value of your property against the home equity loan you are asking for. You will require a home appraisal certificate to get the exact current value of your home and don’t worry your lender will assist you in this.
The closing- Closing process is all business and no fun. You will need a notary for the signing process. According to some state law, you might also need an attorney for the closing of the deal.
There are few ways you can help to fasten the process to get a home equity loan quickly. There are some factors on which you have full control like documents. You can prepare in advance and organize your documents according to your lender’s demand.
The documents you might require for the home equity loan application process are as following:
- A copy of your property’s deed
- Mortgage statement, the most recent one
- Tax returns for the last 2 years
- Trust agreement documents, if applied
- Current pay stub
- Tax assessment
- Verification of additional income, if you have any and not shown on tax returns
- A list of payoffs for debt consolidation, if applicable
Who Can Apply For a Home Equity Loan?
There are not many conditions that one needs to meet before applying for a home equity loan but if you don’t meet them you are not eligible to get a home equity loan.
The most common qualifications are:
- A borrower must have a minimum of 15-20% equity in the property or have paid the 15-20% of the mortgage amount only then they can apply for a home equity loan.
- You need to show proof of your employment and stable income for the past 2 years via pay stubs of tax returns
- A borrower must have a low DTI ratio. You need it to be below 50% at least to get qualified
- Your credit score must fall into 620-700 FICO score or above to get a home equity loan
How Long To Get The Home Equity Loan Funding After The Approval?
Now, comes the question of most importance exactly how long to get a home equity loan funding after the approval? Well, your lender is the only one who can decide and give you the accurate answer to this question. Either, you could get the cash immediately or it could take a maximum of 4 days to turn in the money.
If you don’t receive the money within 3-4 days you can cancel the contract according to federal law when your home is collateral against the loan. This doesn’t happen very often but it does you should not worry and cancel your contract with the lender. Though, you might have to go through the process again to get the home equity loan.