How Long Does It Take to Get a HELOC in 2024?

Whether you’re looking to kickstart that remodeling project or want quick cash to fund your emergency/unexpected expenses, a home equity line of credit might be at the top of your list of available options.

On this Page, you will find every bit of information you need from the basics and requirements to the timeline, and tips, to start and get your HELOC application approved quicker.

Understanding HELOC

A HELOC is a revolving line of credit, similar to a credit card. You can withdraw money as needed, depending on your requirements, up to a fixed limit.

HELOC essentially means that you will be getting money based on the equity that’s been accumulated in your home so far. We will get to the maximum equity requirements in a bit.

Every house has something called equity. This represents the savings you've accumulated by paying down your mortgage and increasing your home's value, which can help you qualify for the best HELOC loan available.

Now, let’s look at the interesting calculation of your home equity

How to calculate your home equity in 2024?

Alright, let’s do some HELOC math! It’s the simplest calculation you can ever do.

For eg., your equity would be $400,000 if the appraised value is $450,000 - the amount you owe in your mortgage is $50,000. It goes like this - $450,000 - $50,000 = $400,000

So, as you pay off your primary mortgage, the equity in your home increases. But, what if you don’t owe anything on a mortgage? Then, you have 100% access to your equity.

However, the limit available for you to borrow will be known once your home is appraised. You will get to know more about the ins & outs of the appraisal process in the HELOC timeline below.

Time to take a look at the specific criteria that the top home equity companies use.

Requirements & Eligibility for your HELOC

Qualifying for a HELOCis not as difficult as it sounds if you have a good financial background.

Let’s see what these are:

1. 15-20% of equity in your home.
2. A minimum credit score of 660.
3. Having a DTI ratio of 43% or less can increase your chances of getting approved.

Before gathering documents, consult the best home equity loan lenders about additional criteria they consider beyond basic requirements based on your financial profile.

How long it takes for approval - 2024 HELOC Timeline

Getting a HELOC usually takes about two to six weeks.

We have divided the timeline into 4 different periods for you. It goes like this – Gathering, submission, underwriting, and closing.

Gathering your documents - 14 days

These are the list of documents you need to gather so that there are no interruptions throughout the HELOC timeline.

Your driver’s license or state ID	Home deed to prove your homeownership
Social security card	Appraisal/Home inspection details
Banking statements	Property tax information
Pay stubs, W-2s/1099s & tax returns	Home insurance documents
Mortgage statements	Lien information if any

Some documents can be readily available, but others may require additional time. For instance, scheduling a home appraisal for property valuation might be necessary, taking one to two weeks for completion.

Check with your lender to clarify specific requirements, as not all lenders mandate appraisals.

2. Application submission - 3 days

Prepare necessary information for faster application, respond promptly to lender's document requests for smooth processing.

3. Underwriting - 30 days

To qualify you for the best home equity loan terms, lenders first assess your creditworthiness based on factors such as your credit score, DTI ratio, income, and mortgage availability, with loan underwriting typically taking around a month.

4. Loan closing - 5 business days

At the signing appointment, you finalize all HELOC paperwork and schedule fund disbursement, typically within a week. If you reconsider, a three-day cooling-off period allows cancellation.

After this, your HELOC becomes active in four days. In urgent situations, we'll explore ways to expedite the process later in the blog.

8 Things you need to know before applying for HELOC

Here are a few steps you need to be aware of, so that you're well-prepared to kick off your application smoothly, without encountering any interruptions or delays along the way.

1.Check your finances

This not just applies to HELOC, but every other loan option available in the market. Take a close look at your money situation before starting your application.

Since you're using your home as collateral, make sure you can handle the responsibility of monthly payments.

2.Calculate your home equity

Figure out how much of your home you actually own by subtracting your mortgage balance from its current value as it’s explained in today’s blog. While some lenders proceed with 15%, you usually need at least 20% equity to qualify for a HELOC.

3.Decide how much to borrow

You can typically borrow up to 85% of your home's value. Calculate the amount you need, considering additional costs like application fees and closing costs.

4.Shop Around For The Best Home Equity Lenders

Different lenders offer different rates and have different requirements. Check out at least three of the best home equity loan lenders to start with, compare their rates, and see what works best for you.

5.Apply with the required documents

Submit an application along with necessary paperwork, such as income documents, proof of homeownership, and mortgage statements as required by your lender.

6.Review the details

SOnce you get an offer, carefully read through all the terms and conditions. If there's anything you're not sure about, ask questions and get it clarified from your lender.

7.Underwriting process

The lender will review your application, which can take some time. They might even need to appraise your home. So, have patience during this waiting period.

8.Sign closing papers

Lastly, if everything works out well, you'll sign the closing paperwork. After that, you'll get access to the borrowed funds in a few days.

These are a list of actionable steps you will be going through during your application process. Remember that a HELOC is still borrowed money and needs to be paid back with an interest amount.

Now off to the tips to speed up your HELOC application process.

4 Tips to speed up your HELOC process

To get HELOC immediately during times of emergencies, here are some simple things you can do:

• Check lenders who offer quick timelines

  Some lenders might process things faster than others. Make sure they're also offering you a good deal with a low interest rate.

• Avoid home appraisal

  Some lenders take a lot of time because they want to check the value of your home with an appraisal. Look for lenders who use something called an automatic valuation model (AVM). It's like a computer program that quickly estimates your home's value, saving you a lot of time.

• Apply alone without co-applicant

  If you're in a hurry, think about applying for the HELOC by yourself without involving your spouse in the application. When you apply with another person, it can take longer for the lender to go through all the information.

• Get your papers ready

  Lenders need to check some documents like the ones we’ve mentioned above, to make sure everything on your application is correct. For example, they might want to see your recent pay stubs to know how much you earn.

Is HELOC the right one for you?

Now, the ball is in your court. You are the one who needs to decide if HELOC is the right one for you. Check your home equity, eligibility and see if you qualify for it.

Then make a list of emergency needs and non-emergency needs. From our observation, we found that HELOC is more useful for individuals who take it out to meet their unexpected expenses than those who take it out to pay off college tuition fees or vacations.

Assess your financial situation, and evaluate whether the benefits of a HELOC align with your long-term plans. If they don’t, you might have to look for alternative options available. Scroll down to know them 👇

Alternatives to HELOC

There are a few other faster loan options available if you don’t want to take out a HELOC or if you don’t qualify for one.

Two common methods are cash-out refinance loans and home equity loans. These have their advantages, but with interest rates going up, they might not be the best for you.

Alternatively, personal loans and credit cards offer faster access to money, but compared to HELOC they don’t have many benefits.

Personal loans will offer a lump sum that you can later repay in monthly installments and you don’t need to show any collateral to get one. The borrowing limits range from $10 to $100,000.

Credit cards are a type of revolving credit and come with variable interest rates. It’s mostly used for leisure purposes like for everyday shopping, and travel. They also offer rewards after a certain spending period which you can later use however you want. The average limit on a credit card is $28,930.

What’s next?

We hope you found answers to all your HELOC questions today. If you’re planning to get a HELOC in 2024 make sure you check out the specific requirements from different lenders and see what they offer. It's like comparing prices when you shop for something, you want to find the best deal.

Also, keep in mind that getting a HELOC might have some extra costs, like fees for checking your home's value. These are things you should think about when figuring out how much money you'll actually end up paying.

And here's a tip from our HELOC expert Jeremiah Sherer 👉 There are other ways to borrow money using the value of your home, like taking out a home equity loan or doing something called a cash-out refinance.

So, take your time to explore these options and pick the one that makes the most sense for you.