Streamline the home equity loan process. Learn about the approval timeline and closing steps with Truehold's expert insights.
Home equity loans are a type of secured loan option that helps homeowners accomplish long-term goals, like finally replacing an aging roof, adding on an extra bathroom, or tackling debt consolidation. With inflation sending everyday expenses soaring and American credit card debt reaching record highs of over one trillion dollars1, some may see their home’s equity as an emergency fund, or as the only way to make ends meet in unprecedented times. While this may not be the wisest use of a home equity loan, for some using the home equity loan to pay off debt seems like the only option.
In situations like this, the sooner this home’s equity is freed up, the lower the risk is of defaulting on other loans (or worse.) So, how long does it take to get a home equity loan? The truth is the total time it will take to get a home equity loan will depend on how much equity you have accrued, your credit history, as well as your debt-to-income ratio. If you meet or exceed the average minimum requirement of 15 percent, your primary hold-up will be the loan processing time, which can range from a couple of weeks to a few months.2 If you’re still beneath this requirement, you’ll have to hold off to get the loan amount you want until you’ve accrued enough equity or consider a different pathway altogether. Whether you’re considering a home equity loan option to accomplish huge goals or simply lessen your financial burden, keep reading for a clearer understanding of the home equity loan process.
With an approval timeline ranging from two weeks to two or more months, homeowners in desperate need of some quick cash may be discouraged from pursuing a home equity loan. But with the proper planning and preparation, you can do everything in your power to get the best home equity loan rate and keep this processing time as brief as possible. Here’s a full list of everything you’ll need to apply for a home equity loan and keep the process moving quickly.
Like with your primary mortgage, a home equity loan or second mortgage application will ask for personal information ranging from your name and social security number to your employment history and current account balances. This information may be fairly simple, but be sure to keep it handy to ensure a fast-moving process.
To understand your situation and offer you the right home equity loan product, lenders will need a wide variety of information on your current property. Be sure to have information pertaining to your home’s value, history, and purchase, as well as any individuals named on the mortgage. Lenders will comb through this information with a fine tooth, creating a bottleneck in the process without proper organization.
Lastly, and perhaps most crucially, a time-consuming component of the home equity loan application process is the research phase. Here, you’ll explore various products and lenders, ensuring you’re getting the best fixed interest rate and loan term. Considering this part of the process largely comes down to your own efficiency, it can be tempting to rush to free up your equity as quickly as possible. But rest assured that the more thorough you are when comparing different home equity loans, the better your outcome will be. Therefore, an extra day or week dedicated to this research will be time well spent.
Once you’ve done your research, comparison-shopped, and gathered all your necessary information, you can submit your application with your chosen lender(s). This is where having all of the above materials organized will pay off. But while you’ve already done a great deal of behind-the-scenes work to get to this moment, this is effectively where the countdown begins.
See, while you’ll submit information regarding your home’s purchase price and value with your application, loan approval will be contingent on a professional home appraisal –– confirming your home’s value to mitigate risk on behalf of the lender. According to most accounts, this home appraisal can take anywhere from a couple of days to a week, depending on how quickly it’s ordered by the lender.3 Unfortunately, there is little homeowners can do to speed up this process. You’ve done all the hard work, and all you can do now is wait (and maybe try to keep yourself distracted in the meantime.)
If your home equity loan is approved (congratulations!), you’ll continue with the closing process. This is where you’ll review and sign all necessary documentation and take the next step toward receiving your funds. The closing process is fairly straightforward, but you should still be cognizant of the requirements (and costs) associated with this final step.
See related: Second Mortgage vs. Home Equity Loan
The home equity loan application process is fairly straightforward, but there are still a few reasons why the home equity loan process might stall. It’s wise to remain aware of these potential speedbumps to be sure you know what to do –– if anything –– should they emerge.
As we’ve outlined above, there are several places throughout the home equity loan process where a two-week estimate can quickly devolve into a multi-month process. While many of the most time-consuming steps will happen behind the scenes in the offices of lenders and underwriters, there are ways you can help speed up the approval process.
A home equity loan is a type of second mortgage –– making the application process even more complicated than your first mortgage. This is because your existing mortgage information is required, in addition to all the personal and financial information that went into the mortgage in the first place. The home equity loan application process can create chaos out of even the best-kept records, and the more disorganized these records are, the slower the process will move. So, to stay on pace toward a two-week closing, you’ll want to be sure your records are clear, complete, immaculate, and organized, leaving little room for explanation once they’re in the hands of underwriters.
If some explanation is needed, however, you can keep the home equity loan approval process moving swiftly by remaining available by phone, email, or in person when questions inevitably arise. For this reason, you’ll want to keep your information handy even after your application has been submitted. This will allow you to quickly reference any necessary information should you receive a request for clarity during the application or underwriting process.
While we could easily use this opportunity to encourage you once more to get completely organized before applying for a home equity loan, the “hard work” here will take a bit more foresight. Part of the reason why home equity loans can take months to process is that lenders and their underwriting teams are carefully evaluating whether the risk of authorizing the loan is worth it. So it makes sense, then, that one tried-and-true method of expediting the home equity loan approval process is to eliminate some of this risk.
If possible, things like improving your credit score, paying off debt balances, and ensuring your bills are always paid on time can make you look less risky in the eyes of a lender, making it easier for lenders to loan you money in good faith. This can be a multi-year process for some borrowers –– and may contradict your reason for applying for a home equity loan in the first place –– but we didn’t say this work would be easy.
At most, the home equity loan approval timeline can be three months or hard work, anxiety, and anticipation. And at its most brief, it can be two weeks –– featuring similar levels of hard work and anxiety. But if you’ve done the research and determined that a home equity loan is right for your needs, even the least optimistic timeline estimate will likely be worth the wait.
If you’re still on the fence, or looking for a way to free up your home equity on a less uncertain timeline, you might find that Truehold’s sale-leaseback is the solution you’re looking for. Our sale-leaseback allows you to sell your home in exchange for your home equity, without any lengthy underwriting process or drawn-out investigations into your personal and financial history. You continue living in your home while paying rent, and unlike a home equity loan, your equity is yours, debt-free. So, whether you plan on using your equity to finance a brighter tomorrow or create breathing room today, Truehold helps you do it.
Want to learn more about Truehold’s sale-leaseback and discover a more predictable alternative to home equity loans? Contact us to learn more and get an all-cash offer on your home within 48 hours.
1. CNN Business. Americans’ credit card debt hits a record $1 trillion. https://www.cnn.com/2023/08/08/economy/us-household-credit-card-debt/index.html
2. Investopedia. How Long Does It Take to Get a Home Equity Loan? https://www.investopedia.com/how-long-to-get-home-equity-loan-5323851
3. Rocket Mortgage. How Long Does An Appraisal Take, And What Factors Can Affect The Home Appraisal Process? https://www.rocketmortgage.com/learn/how-long-does-an-appraisal-take
4. ocket Mortgage. A Guide to Home Equity Loan Closing Costs. https://www.rocketmortgage.com/learn/home-equity-loan-closing-costs
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