How Long Does It Take to Get a Home Equity Line of Credit (HELOC)?

You might consider a home equity line of credit (HELOC) if you need cash for debt consolidation or significant expenses. It offers a way to get money while borrowing against the value of your home. 

But how long does it take to get a HELOC? 

The process generally takes about two to six weeks. The exact length varies depending on the lender, the complexity of your application, and how quickly you can compile the necessary paperwork.

Understanding HELOCs

Equity is the difference between your mortgage balance and your home’s market value. When you make your mortgage payments each month, you build your home’s equity. When you need extra cash, you can tap into up to 85% of your home’s equity through a home equity loan or a home equity line of credit.

Home equity loans are fixed-rate loans that provide lump sum cash with a set repayment period. They’re a good option if you’re planning a single big purchase and want the consistency of a fixed-rate loan with stable monthly payments.

HELOCs are slightly different from home equity loans. They are a type of revolving credit, working a lot like a credit card. You can borrow, repay, and borrow and repay again as often as you want up to the limit. Your minimum payment is the interest for the month.

There are several great reasons to choose a HELOC, such as for lengthy home renovation projects. This loan type allows you to borrow money as needed while paying interest only on the amount borrowed instead of the entire sum, saving you money long-term. 

A HELOC is also often used for debt consolidation because it usually offers better interest terms than personal loans, credit cards, and other secured debt. 

Let’s say you have a few types of existing debt, like a high-interest personal loan and balances on a few credit cards. You can take out a HELOC with a lower interest rate and then pay debt down – or even entirely. 

While HELOCs are an excellent way to get cash, remember that your home is collateral. If loan payments are late or missed, the lender can foreclose on your home and take possession of it.

Factors Influencing the HELOC Timeline

When getting a HELOC, you borrow money against your home’s value. Qualifying for a HELOC differs from lender to lender. In most cases, they’ll want you to have:

• At least 20% equity in your home
• A max debt-to-income ratio of 43%
• A credit score of 700 or higher 

Every lender has unique time frames for reviewing and approving HELOC applications. 

Generally, the process for obtaining a HELOC loan looks something like this:

• Gather Your Documents. The lender will verify your income and asset information during the HELOC application process. To do this, you must submit documents supporting your assets and compensation. The application process will require information about the property, your current mortgage, and your driver’s license or social security card. When you submit your application, you’ll also need copies of pay stubs, bank and investment statements, and tax forms. Self-employed applicants may require additional income documentation.  
• Complete Your Application. Once you gather all the documents, it only takes a day to submit your application. Then, a lender representative will contact you to discuss your application. They will advise you on any additional documentation needed. 
• Underwriting Process. The lender will review your creditworthiness and eligibility. This process could take up to a month to complete. During this time, they will review your income, credit score, and debt-to-income ratio. As part of the process, they will perform a hard credit check.
• Closing. Once underwriting is complete, it’s time to close your loan. Closing is when all the paperwork becomes official. You’ll meet with the lender, sign loan documents, and schedule the funding of your loan. You’ll have a three-day rescission period, during which you can cancel the HELOC if you change your mind. After this period, the account is active, and funds are available. 

How to Expedite the HELOC Process

How long does it take to get a HELOC? Timing from submitting your application to receiving HELOC approval takes about two to six weeks. Of course, the time frame may be shorter or longer, depending on:

• How quickly you provide documentation
• The lender’s backlog
• The complexity of your financial situation
• Property appraisal timing

Being proactive and strategic about your application can transform an often lengthy and tedious process into one that’s efficient and tailored to your needs. 

Strategies to help expedite the HELOC approval timeline are:

• Get Organized. Lenders need time to check documents and supporting information. A well-organized application can save you from back-and-forth with your lender and speed up the process.
• Apply Alone. A co-applicant adds time to the underwriting process and increases the documents needed. If time is a priority, apply for a HELOC in your name instead of co-borrowing with a partner. 
• Work With a Lender You Know. Start by talking about your current mortgage. Your lender could save you time and money because they have much of your personal information on file. They also may be able to provide you with a better rate due to your ongoing relationship. 
• Apply Online. Use technology to your advantage throughout the process. Work with a lender that accepts online document submissions. Lenders offering online application systems can shave days or even weeks off your approval timeline. 

Potential Delays in the HELOC Process

Applying for a HELOC may be done in a day, but approval can take longer. The most significant influences on how long it takes to get a HELOC are the lender you’re working with, the underwriting process, and whether an in-person appraisal is needed. 

You’ll want to work with an experienced lender like Focus Federal Credit Union when securing a HELOC, as it can make the overall experience smoother and more pleasant. Effective communication ensures you understand their loan obligations and have adequate access to support and resources when needed.

Underwriting is often the most time-consuming step in the process. Your lender might request additional documentation. You can speed up this step by preparing your supporting documents and applying for a HELOC with the lender who holds your current mortgage, which cuts down on the records needed. 

The lender needs to know how much equity you have, which requires an appraisal. An appraisal can be done in person or digitally using an automated valuation model. A digital assessment may shave time off the HELOC application process since you won’t have to wait for a spot to open in an appraiser’s schedule.  

Comparing HELOC Timelines Between Different Lenders

Knowing you’re getting the best option is difficult without comparing lenders. Subtle differences between interest rates and fees could translate into a significant dollar amount. Various application processes can affect the timeline for getting approved. Looking at multiple lenders lets you pick the best one for your situation. 

Do your research and evaluate:

• Interest Rates. Lenders may have different interest rates, significantly impacting your HELOC costs. Evaluate fixed versus variable rates. A slightly lower rate might not be the best option if it can skyrocket in the future. 
• Fees and Costs. Compare origination fees, annual fees, and closing costs between lenders. These extras can add up. 
• Reputation. Online and personal reviews can provide a window into what to expect. Is the lender responsive? Do they have positive reviews?  
• Timing. How long does it take to get a HELOC? Many lenders provide streamlined online applications to speed up the process. They allow you to upload supporting documents online to save time. 

Getting a HELOC with FFCU

Want to unlock the equity in your home but need help figuring out where to start? Now might be a great time for you to open a HELOC. It’s always wise to shop around and speak to a few lenders. If you’ve never applied for a HELOC, it helps to know what to expect during the application process and how long you may wait for funding. Focus Federal Credit Unions can help you understand how long it will take you to get a HELOC and possible ways to reduce that time. Learn more about our HELOC loans and start your online application.