How long does it actually take to get a HELOC?
Getting a Home Equity Line of Credit (HELOC) is often a great way to access the equity you’ve built up in your home. Whether you want to make improvements, pay off debt, or take advantage of other opportunities, there are numerous reasons why this type of loan can be beneficial. But how quickly can you get a HELOC? The answer depends on several factors, varying on your lender, the appraisal process, your creditworthiness, and how fast the lender can get the information they need.
The Overview
HELOC processing speed varies between lenders from as fast as 5 days to 6 weeks
Traditionally, bank HELOCs take about 2-6 weeks, with the largest factors affecting speed being the appraisal and how quickly the borrower can provide documentation
Newer online banks use big data technology to analyze data and speed up the approval process
The best thing you can do to get approval faster is to provide the bank with all of the necessary information and documentation so they can begin processing
How fast can I get a HELOC?
How fast a HELOC can be processed and funded ranges from 5 days to several weeks, depending on many factors. Every lender has different requirements and processes, so there is significant variation from lender to lender. Traditional banks tend to take longer than nonbank lenders, who often use technology to speed up the loan process. Other factors that influence speed include your credit score and the appraisal process. Making sure to provide all of the documents and information the lender requests is the best way to help speed up the process.
What is a HELOC?
A HELOC, or home equity line of credit, is a revolving credit line that is secured by the equity that you have built up in your home (that is, the difference between your current home value and any mortgages you have). Because it is a secured loan, lenders offer substantially lower interest rates than you would find on a credit card or personal loan.
HELOCs are flexible in terms of how much you borrow and repayment terms. Instead of receiving a one-time single payment upfront, as you would with a traditional home equity loan, you withdraw funds as needed up to your credit line maximum. During the initial period of the loan, the draw period, you can withdraw funds from the credit line. During the second period, the repayment period, you can no longer withdraw funds and must pay back the remaining principal balance.
The Traditional HELOC process
Generally, it takes about two to six weeks from submitting your application to receiving funding for a traditional HELOC with banks or credit unions. This is because you need to provide the lender with all of the necessary information and documents including income and employment verification. Additionally, the lender may have its own processing time dependent on their current workload.
When applying for a HELOC you will need to first gather all of your documents and submit your application. Most lenders have online applications that only take a few minutes to complete. Having all of your information handy at the time you fill out the application will help the lender process your loan immediately.
Most lenders will require an appraisal and will have their own preferences in terms of how this is done. Some will request a full appraisal by a professional appraiser, while others may request desktop, exterior-only, or automated appraisals (AVMs). The appraisal is often what can slow down the process, so it's important to understand exactly what is required by your lender.
Next, the lender will begin the underwriting process, reviewing your financial information to determine whether you qualify for a HELOC and how much money can be borrowed. Your eligibility for the loan depends on various factors such as income, credit score, debt-to-income ratio, available equity, and more. Once the underwriting is complete you will be able to close on the loan. Some lenders request to do this in person, while others allow you to complete the process online.
Ensuring that you meet all of their application requirements quickly and accurately will help reduce your loan processing time frame significantly. It is best to research and compare different lenders so you can find one that meets your specific needs while keeping an eye on how long you’ll need to wait before obtaining your funds. As a general guideline, expect that when taking out a HELOC loan, it could typically take anywhere between 2 and 6 weeks depending on how promptly you can provide evidence of income and other documents needed by your lender for qualification purposes.
The Faster HELOC process
The fastest HELOCs on the market are those that capitalize on technology to improve speed and reliability, providing cash funding in as few as 5 days. Figure is one such online lender that uses lightning-speed computer programs to analyze data, offers virtual notary services, and connects to your online banking to make the application process smoother and faster.
The process is much the same but eliminates the need for excessive paperwork and the possibility of human error. It begins with an application process that you complete online. However, instead of uploading documents and paperwork, you will connect your HELOC application to your other banking institutions. This will be used to verify your income and credit score. An appraisal will be required, but can be done instantaneously by an automated valuation model that uses known data on the property, community, and comparable homes in the area.
What Affects the Speed of Getting a HELOC?
When it comes to getting a HELOC, many lenders have different requirements and time frames. Generally speaking, there are several factors that can affect how long it takes to get approved for a loan.
The first factor is your credit score. A higher credit score will make it easier to qualify for a loan and can help speed up the process. Your credit history and debt-to-income ratio are also important, as lenders will want to make sure you have a good track record of managing your finances and that you’re not taking on too much debt.
The second factor is the lender. Different lenders have different requirements when it comes to HELOC loans, from application processes to underwriting times. It’s important to research lenders and compare their requirements and timelines to see which one is best for you.
The third factor is the home appraisal. Before a lender can approve a HELOC, they’ll need to have the home appraised in order to determine how much equity you have in it. This can add some time to the process, so it ’s important to factor this in when you’re considering how long it will take to get approved.
Finally, it’s important to consider the current market. The housing market can have a big impact on the speed with which lenders process HELOC applications – if there’s high demand for HELOC loans, it can lead to longer wait times.
The bottom line
Getting a HELOC is a fairly straightforward process. The speed at which you’re able to get approved for a HELOC depends on several factors. Your credit score, financial history, lender requirements, and the state of the current housing market all play a role in how quickly you can receive your loan funds. Modern online lenders such as Figure offer a faster alternative to traditional bank loans. Most importantly, regardless of the lender that you choose, make sure to provide all of the information the lender needs as quickly as possible so that they can begin to process your loan.
