How Long Does It Take to Get a HELOC?

A home equity line of credit (HELOC) can offer a practical solution to your funding needs. Whether you plan to undertake a long-term home renovation project or want access to funds when needed for education costs, medical expenses or other long-term needs, a HELOC can help. How long does it take to get a HELOC? It can take anywhere from two to six weeks. Read on to understand key considerations and how to speed up your approval process. 

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Understanding How Long It Takes to Get a HELOC

A home equity line of credit (HELOC) is a type of 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 you need them, but only to the maximum approved amount. To use the line of credit, you will use a special credit card or special checks.

You can use a HELOC for a variety of purposes, from home improvement projects or education to high-interest credit card debt consolidation.

Process of Getting a HELOC 

Getting a HELOC requires you to apply 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 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 mortgage lenders to compare interest rates and terms. To get started on your research, you can find the best HELOC lenders here. 

You could take up to a couple of hours to submit the applications, but you could also complete multiple applications in under an hour. After, the lenders should be able to reach out to you with quotes of interest rates and terms within a couple 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. When your chosen lender has completed underwriting, you'll receive final loan approval. 

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 of your loan. Once you sign the documents, the loan should close within one week.

Estimated completion time: Five business days

Factors that Affect the Speed of Getting a HELOC

Several factors affect the speed of HELOC approval. Some of these, like credit score, are in your control. Here's what may affect your loan approval. 

Credit Score

A good credit score can increase your chances of HELOC approval. In general, a credit score of 620 or higher will qualify you for a HELOC, while a credit score of 700-plus can help you qualify for a lower interest rate. 

Loan-to-Value Ratio

Your loan-to-value ratio (LTV) can impact your approval time and amount. The LTV is the total of your existing mortgage plus your HELOC. Most lenders like to see applications with at least 15% to 20% equity in the home. If the total amount of your existing mortgage and HELOC is 80% of your home’s value or more, the approval process may be longer. 

Home Appraisal

A HELOC application may require you to get a current home appraisal. You'll need to schedule the appraisal and wait for the report, which adds time to your application and final approval time.

Lender

Your chosen lender can affect the processing time of getting a HELOC. Each lender has its own approval process and timing. Some lenders may have longer processing times or may require manual underwriting, which can add to your approval time. In addition, lenders look for a debt-to-income (DTI) ratio below 50%, and 36% to 43% is preferred.

How Can You Speed Up the Approval of Your HELOC?

To speed up the approval process of your HELOC, come prepared. Consider these tips:

• Prepare your documentation
• Organize the professional appraisal ahead of time
• Work to raise your credit score
• Build more equity in your home
• Get quotes from at least three HELOC lenders
• Keep your CLTV as low as possible

Find the Best HELOC Lenders from Benzinga’s Top Providers

Find some of the best HELOC lenders from Benzinga's trusted partners here:

Should You Get a HELOC?

A HELOC gives you access to the equity you've built in your home. Whether it's the right financial decision for you to take out a HELOC depends on your financial goals and situation. If you can save for the expense, rather than taking a HELOC, you'll avoid taking on additional debt. 

If you need flexible access to cash in case of emergency, a HELOC can make sense. You can also consider a HELOC versus a refinance. You might even be able to use a HELOC to pay off your mortgage. Not sure whether you need a HELOC? You can learn more about how home equity loans work or whether you should consider a first-lien HELOC.

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