7 Ways to Speed Up Your HELOC Approval
HELOCs offer fast access to your home's equity compared to a cash-out refinance.
But taking out a line of credit isn't instantaneous – you'll still need to go through the loan underwriting process. Thankfully, there are some steps you can take to speed up your HELOC approval.
How Long Does It Take to Get a HELOC?
In most cases, it can take between two and six weeks to close on a HELOC. Various factors may impact this timeframe, including the lender you select and how prepared and responsive you are in supplying the necessary documents.
How to Speed Up Your HELOC Approval
There's a big difference between a two-week and a six-week approval. If time is of the essence and you need to access your home's equity as quickly as possible, you'll want to be proactive moving your application through the process.
Here are seven ways that you can help speed up your HELOC approval:
1. Check Your Credit Before Applying
Lenders will pull your credit and comb through your report as part of the underwriting process.
In fact, many HELOC lenders have stricter credit standards than traditional mortgage companies. It's not uncommon for lenders to look for a score of 680 or higher, although options down to 620 do exist.
If you haven’t checked your credit profile lately, you can visit AnnualCreditReport.com to get a truly free copy of your report from all three credit bureaus. Spot and correct any erroneous information.
2. Gather Financial and Property Documents
One of the primary causes of delays in lending is not having the correct paperwork ready or submitting it promptly when requested. Loan underwriting is a multi-layered process, and waiting for even a single document can hold up your line of credit.
If you want to move through the HELOC approval process as quickly as possible, be sure to have your:
Two most recent pay stubs
Two most recent years of W-2s (or 1099s) and signed federal tax returns
Most recent 60 days of bank statements
Investment account statements (if applicable)
Current mortgage statement
Homeowners’ insurance policy (including the declarations page)
These are the most commonly requested documents when taking out a HELOC. Still, your lender may need other items based on your unique situation: proof of income from non-traditional sources such as royalties or child support, company financials for self-employed borrowers, or an explanation letter for an employment gap or past credit problems.
3. Get Quotes From at Least Three HELOC Lenders
It may seem counterintuitive to spend time shopping around if you're trying to move your HELOC along as quickly as possible. However, simply going with the first lender can be costly and time-consuming.
Getting quotes from at least three different lenders allows you to compare rates and HELOC closing costs and ensure you get the best deal possible. It also enables you to ask about each lender's current processing time, which can significantly impact how long your HELOC approval takes.
Get your HELOC quotes. Start here.
4. Don’t Forget About Local Credit Unions and Banks
Often overlooked as a source for home equity lines of credit, local banks and credit unions commonly provide more personalized service and get your HELOC approved faster than large national institutions. These lenders are better connected to the local community and have much more flexibility when approving HELOC applications that fall outside of typical guidelines.
5. Find a No-Appraisal HELOC
Like most mortgages, your lender needs an accurate property value.
Unfortunately, waiting for the appraiser to complete their full report can add weeks to the underwriting process. In many cases, this can be the most significant delay in getting approved. Shop around for a lender that won't require you to get a traditional home appraisal.
Rather, ask if they cab do an automated valuation model (AVM) that uses local housing data to instantly calculate how much your home is worth without the need for an appraiser.
You’re most likely to be approved for a no-appraisal HELOC if you:
Have very good or excellent credit (740+)
Owe a low balance on your current mortgage compared to the home’s value
Are applying for a small line of credit
Recently had an appraisal completed
What if you can't find or qualify with a lender offering HELOCs with no appraisal? In that case, your next fastest option is to search for a company that allows for alternatives to an in-person inspection, such as a desktop appraisal. Desktop appraisals are a type of remote valuation where an appraiser establishes your home's value based on publicly available information.
6. Don’t Apply With a Co-Borrower
Unless you need a co-borrower to meet lender guidelines, you could be approved sooner by applying alone. The reason is simple: the lender must underwrite all loan applicants, and two borrowers means more documents and credit reports to process.
7. Keep Your CLTV as Low as Possible
The more equity you cash out of your home, the riskier the loan is to your lender.
Keep your loan-to-value, including all loans on the property, well below the lender maximum.
Get started on your HELOC here.
Alternatives to Getting a HELOC
Opening a home equity line of credit is one of many ways to access your home's equity or get the funding you need. Depending on your financial situation, here are some HELOC alternatives that could be faster, cheaper, or all-around more practical.
Home Equity Loans
Like a HELOC, home equity loans are a type of second mortgage that leaves your current loan in place. But instead of drawing on your equity over time, you borrow a lump sum upfront and begin the repayment period right away.
Where HELOCs usually have adjustable rates, home equity loans are typically fixed. This can be good for budgeting or if interest rates increase in the future but bad if rates continue to fall.
Cash-Out Refinances
Homeowners generally opt for a HELOC when their existing mortgage has an interest rate below what's currently available from lenders. But a lower-rate cash-out refinance may be cheaper than a HELOC if you need to tap into a substantial portion of your home's value.
Plus, if your credit has improved or rates have dropped since you took out your mortgage, it might be possible to get a cash-out refinance with a lower rate than you have now.
Check today's cash-out refinance rates.
Renovation Refinance Loans
One of the most common reasons property owners open a HELOC is to fund home improvement projects and renovations. In some cases, however, taking out a renovation refinance loan may make more sense.
With conventional and government-backed programs available, renovation refinance mortgages will have lower interest rates than a second-lien HELOC. In most scenarios, rates will even be lower than a cash-out refinance.
With a renovation refinance loan, the amount you can borrow is based on the property's post-improvement value rather than its current appraisal, so you may be able to access more funds than with a line of credit.
Personal Loans
Personal loans can get you cash within days instead of weeks. Commonly issued by banks, credit unions, and online lenders, personal loans are unsecured, meaning they're not tied to your home. Unlike with a HELOC or other type of mortgage, your lender can't foreclose on your property if you fall behind repaying a personal loan.
Personal loans have higher interest rates and lower available loan amounts compared to HELOCs.
Credit Cards
Borrowing with credit cards can be simpler and faster if you don’t need a large amount of funds.
Qualified applicants can get approved for a new account on the spot, with most major credit companies providing access to a digital card within 24 hours.
Rates will be much higher than with a HELOC, but the extra cost may be worth the simplicity if you don't plan to carry the balance long. Some credit cards may even come with an introductory zero-interest or low-interest period. Like a personal loan, credit card debt is unsecured and not tied to your home's title.
Apply Today and Get Your HELOC Approved Faster
HELOC waiting times can vary from lender to lender, but being proactive in moving your application through the underwriting process can get you funded in as little as two weeks in some situations. Ultimately, however, the sooner you begin the process, the sooner you can get approved for your line of credit.
Check today’s HELOC rates and begin shopping around with lenders who fund loans in your community.
Tim Lucas is the editor and Lead Analyst for MortgageResearch.com. Tim spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. He has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.
