The HELOC application and approval process can take anywhere from two to six weeks.
Nobody likes playing the waiting game, especially when it comes to money. So if you’re considering a home equity line of credit, you might wonder how long it takes to get a HELOC.
Sorry to disappoint, but the answer is – it depends.
“HELOCs are not immediate, and the pre-approval process can range between 48-72 hours,” says Jose Garcia, president and CEO of Northwest Community Credit Union. “However, you will not be able to withdraw funds until the process closes, and that usually takes about 30-48 days, depending on the lender and how quickly you can provide the necessary documentation.”
In this guide, we’ll walk you through the HELOC application process, break down how long it takes to be approved, and provide tips on how you can speed up the process.
What’s a HELOC?
A home equity line of credit (HELOC) is a second mortgage that lets homeowners borrow against their home equity. Unlike a home equity loan, a HELOC functions more like a revolving line of credit. Instead of receiving a lump sum, you can access funds whenever needed, but only to the maximum approved amount.
Equity is the value of your home minus the remaining mortgage balance. A HELOC will grant you up to 80% of the equity you’ve built in your home, so if you have $100,000 in equity, you could be approved for an $80,000 loan.
You can use a HELOC for various purposes, from home improvement projects or education to high-interest credit card debt consolidation.
Time Table to Get a HELOC
Getting a HELOC requires applying for approval with proof of income and other documentation. You'll usually need at least 15% to 20% equity in the home. Here are the additional steps.
Gather Necessary Documents
If you have your paperwork in order, you should be able to gather the necessary documents in under an hour. However, you may need additional time to organize a home appraisal.
You may be asked to supply:
- Government-issued ID like a driver's license, state ID or passport
- Tax returns for the past two years
- W-2s, pay stubs or other proof of income
- Bank statements for the previous two months
- Your address and any previous addresses, depending on how long you’ve been living in your residence
- Employer information
- Bank and investment statements
- Mortgage statements
- Home Appraisal
- Home purchase date and price
- Date the home was built
- Property tax information
- Homeowners association dues
- Insurance information
- Information on any liens
Estimated completion time: up to 14 days
Submit Your Application
Next, you'll need to submit applications to multiple lenders. You can apply to your existing mortgage lender and two or more other lenders to compare interest rates and terms. To get started on your research, you can find the best HELOC lenders here.
“Don't settle for the first lender you find,” Garcia says. “Make sure to compare rates and terms from multiple lenders to help ensure you get the best deal that fits your needs.”
Garcia also recommends taking the time to read through the applications carefully.
“Before signing, make sure you know the interest rate, whether it's fixed or variable, and any associated fees,” he says. “There are often details in the fine print, so be cautious of low introductory rates that may increase significantly later.”
Submitting the applications could take up to a couple of hours, but you could also complete multiple applications in under an hour. After that, the lenders should be able to reach out to you with quotes of interest rates and terms within a couple of days.
Estimated completion time: Three days or less
Go Through Underwriting and Loan Approval
The underwriting and loan approval process could take anywhere from two to six weeks, depending on the complexity of your application and whether you have all the necessary documentation. You'll receive final loan approval when your chosen lender has completed underwriting.
Estimated completion time: 30 to 45 days
Close the HELOC
Once underwriting is complete, it's time to close on the HELOC. To close, you'll meet with your lender, sign loan documents, and schedule the funding for your loan.
Estimated completion time: Five business days
Helpful Tips for Speeding up the Process
Here are some tips on how to speed up the HELOC application process and get your money sooner.
- Have a good credit score: Most HELOC lenders require a minimum credit score of 620. However, a higher credit score could help speed up the process since it will ensure the lender that you’re likely to pay back the loan. A lower score, on the other hand, may give them pause and require them to dig further into your financials before giving their stamp of approval.
- Have all the necessary documents in place: This one’s self-explanatory. A missing tax return or other important piece of paper could hold up the process, so have all your files in one place and ready to go.
- Do your shopping beforehand: You should have a good idea of which HELOC lender you want to use before you start the process.
RELATED: Does a HELOC affect credit score?
Why You Should Trust Us
Benzinga has offered investment and mortgage advice to more than one million people. Our experts include financial professionals and homeowners, such as Anthony O’Reilly, the writer of this piece. Anthony is a former journalist who has won awards for his New York City economy coverage. He has navigated tricky real estate markets in New York, Northern Virginia and North Carolina.
For this story, we worked with Jose Garcia, president and CEO of the Illinois-based Northwest Community Credit Union, which offers multiple financial services, including HELOC loans.
FAQ
Is it hard to get approved for a HELOC?
If you have the necessary documentation ready and meet all of the lender’s requirements, getting approved for a HELOC is not difficult. However, it can take up to eight weeks.
What happens after a HELOC is approved?
After a HELOC is approved, you’ll sign on closing. Then, it can take up to five business days for the money to appear in your account.
What disqualifies you for a HELOC?
You could be disqualified for a HELOC if you have low equity in your home, inadequate income or a low credit score.
Sources
- Jose Garcia, president and CEO of Northwest Community Credit Union
About Anthony O'Reilly
Anthony O’Reilly is an updates editor for Benzinga. He’s won numerous journalism awards for his coverage of the New York City economy and Long Island school district budgets.