How Long To Close On Home Equity Loan

When Is A Heloc A Good Idea

How to Properly Close a Equity Line of Credit Loan

A HELOC can be a good option if you need to access a large amount of money but dont want to pay the high interest rates that are associated with credit cards, debt consolidation programs, and store financing.

A HELOC can be used for just about anything, which makes it really flexible and a popular option for homeowners who are looking to make home improvements, consolidate debt, pay for college, or taking a major trip or vacation.

Unlike a home equity loan, a HELOC doesnt have to be provided in one lump sum. You will be given access to a line of credit, which you can draw from over time. During this time you will make payments on the money you use.

A HELOC is a good option for homeowners who have equity in their homes. Its also best if you have a good credit score and a low debt-to-income ratio.

Choose A Home Equity Lender

Home equity loans are offered by most major banks and mortgage companies. Donât be afraid to shop around to ensure youâre getting the best possible deal on loan conditions and interest rates. Once youâve chosen a lender, all you need to do is get in touch and submit the appropriate application documents.

How Will A Heloc Impact My Credit Score

HELOCs are classified as a revolving type of credit on most credit reports, the same designation as credit cards. However, they dont impact credit scores in the same way.

The issue boils down to the credit utilization ratio, which accounts for 30% of a credit score. Credit bureaus recommend you keep your revolving balance under 30% of your credit limit. That presented a major problem when HELOCs became popular in the 1990s.

HELOC borrowers tend to use up most of the balance right away for things like putting a down payment on a second home or renovating a kitchen. That would put a major dent in your credit score if it were treated as a regular revolving line of credit. For this reason, HELOCs over $35k probably are not factored into credit utilization.

However, different credit bureaus have different rules, and none of them have released an official cutoff. Evidence suggests it is a safe bet that a HELOC over $35k wont affect credit utilization, but anything under that number might count. Thus, for smaller HELOCs, keep your utilization under 30% of your credit limit, and you should have nothing to worry about.

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Is It Better To Get A Home Equity Loan Or Line Of Credit

That depends on your financial situation and needs. A HELOC behaves like a revolving line of credit, letting you tap your homes value in the amount you need as you need it. A home equity loan works more like a conventional loan, with a lump-sum withdrawal thats paid back in installments.

HELOCs typically have variable interest rates, while home equity loans are usually issued with a fixed interest rate. This can save you from a future payment shock if interest rates rise. Work with your lender to decide which option is best for your financing needs.

The Fastest Ways To Cash Out Your Home Equity

Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

When expensive and unexpected financial situations arise, it can be difficult to quickly get the funds you need. But if youre a homeowner, you may be able to cash out your home equity for surprise bills.

There are three main options for taking equity out of your home: Cash-out refinance, home equity loan and home equity line of credit . Weigh the pros and cons of each option to help you determine whether tapping your equity is the smartest choice for your finances, and which option may be best.

Alternatives to taking equity out of your home

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What Are The Terms Of A Home Equity Installment Loan Shows Details

You can borrow up to $750,000 depending on the amount of equity in your home. Terms are flexible up to 360 months . The interest rate is fixed for the term of your loan, and repayments are made in monthly installments of principal and interest.

If you are looking to consolidate debt or pay for large household expenses, the home equity loan may offer you a convenient solution. You can apply by phone, in person or online.

How To Weigh Your Options

Before your HELOC draw period ends, have a repayment plan in place if you owe money. Check with your lender to see exactly how much your monthly payments will change once the principal portion is due.

If you cant afford the change in monthly payments, need to borrow more money or dont like having a variable interest rate, explore alternatives. Weigh the pros and cons of each option before making a decision. For example, when you refinance into another HELOC, you could incur additional costs, such as early closure fees, annual fees and application fees.

In addition, its best to compare rates and fees from various lenders if you choose to refinance.

Recommended Reading: Avant Refinance Loan Application

Getting The Best Heloc Rate

This ones on you: The more you research, the bigger your reward. As you look for the best HELOC rates, get quotes from various lenders. Check your primary bank or mortgage provider it might offer discounts to existing customers. Get a quote and compare its rates with at least two other lenders. As you shop around, take note of introductory offers like initial rates that will expire at the end of a given term.

» MORE:9 tips for getting the best HELOC rate

Low Competitive Home Equity Rates Plus:

How Long Does it Take to Get a Home Equity Loan?

No application fees, no closing costs and no annual fee

There’s no fee to apply, no closing costs and no annual fee. There’s also no fee to convert your variable-rate balance to a Fixed-Rate Loan Option.

Online application

Submitting your application takes about 15 minutes. When you’re done, we’ll show you how to check your application status and securely upload documents.

Convenient access to funds

You have the flexibility to decide when and how much to use through Online Banking, by phone, at our financial centers or with no-access-fee checks.

Mobile & Online Banking

Manage your account, make payments and transfer funds using our top-rated Mobile Banking app and Online Banking.

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Getting A Valuation Of Your Property

Before you can access funds from your HELOC loan, the lender needs to determine the value of your property to determine how much you can borrow.

The good news is that with many home equity loans, a full appraisal is not required. Many companies will look through public records to see the value of your property, or simply drive by your home like in Adam Carrolls case. Assuming the records are accurate, this part of the process can be fairly quick.

Heloc Closing Costs And Fees

A home equity line of credit, or HELOC, is a revolving line of credit that works like a credit card. You use and repay the credit line as needed only paying interest on the amount you borrow.

One key advantage of a HELOC versus a home equity loan is that HELOC closing costs may be lower. However, be prepared to pay many of the same closing costs found with a home equity loan.

To give you a better idea of what these costs may look like, the Bank of Colorado lists the following fees charged when opening a HELOC. The numbers are based on a five-year draw period and 10-year repayment period:

Closing cost type

$100 to $1,500

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How To Get A Low Interest Rate

Follow these steps to get the best interest rate on a HELOC:

Have good credit: The best interest rates go to those with great credit scores. Order your free annual from one of the three credit bureaus and check your credit standing. If youre close to the cutoff lines between good and excellent, for example, spend some time and boost your score before applying for the HELOC. Research some tips and tricks to boost a credit score if needed.

Compare interest rates: Dont settle for the same lender that issued your mortgage. Check other rates from the big national banks, community banks, credit unions and online lenders. Even 1% can be a big difference in the final payoff.

Beware of introductory rates: Be sure to ask how long the teaser rate will last and what it might be after it adjusts. Check if your lender has rate caps that limit the APR in case the variable rate goes through the roof.

Factor in fees: Dont forget about fees. Upfront lender fees, annual fees, inactivity fees and early termination fees might negate any money you thought you saved by going with the lowest interest rate. Look for lenders willing to waive fees.

Have enough equity: Figure out how much you need to borrow from a HELOC and make sure you have enough equity in your home to make that happen. Banks limit HELOCs to 80% of the equity in your home. Equity is based on the difference in the homes current market value and the balance you owe.

Find Out What To Expect When You Apply

Submit Your Credit Application

Apply for a home equity line of credit online, by calling 855-762-9545 or by visiting a PNC branch.

The minimum amount of information you should be prepared to answer at the time of application includes:

Personal Information

Contact Information

Property Information

Requested Loan Amount

Upon submission of your application, PNC will obtain and review your credit history. Approval for credit is contingent upon your credit history and other factors.

Provide Required Documentation

Additional information and other required documentation may be needed to process your credit application. Depending on your individual financial situation, you may be required to provide some or all of the following:

Tax statements

Financial statements

Information on additional properties you may own

, depending on your individual situation.

Documentation, Credit History and Property Valuation Review

Well evaluate your credit history, verify your employment, verify your income, and review all supporting documentation submitted.

Well verify ownership and complete a valuation of the property being pledged as collateral by ordering an appraisal product from an independent service provider, who will always inspect and photograph the propertys exterior. In some cases, this independent service provider may call you to setup a time to inspect both the propertys interior and exterior.

Final Credit Decision

Loan Closing and Disbursement of Funds

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How Long Do Home Equity Loans/helocs Take To Process From Beginning To End

How long should an average homeowner expect to wait for processing a home equity loan or a home equity line of credit ? The answer to that question depends on a few factors but generally is in the range of two to four weeks for the majority of applicants. Thats the time itll take from filling out the application to receiving your funds or approval for the line of credit for a HELOC.

But what are those variable factors that make the difference? Essentially, its the complexity of the situation. That umbrella category includes things like your credit scores, payment history, income, whether youre self-employed, your age, how much equity you already have in the house, and whether you have all the documentation ready to go at application time.

How Do I Determine My Homes Market Value

If you dont have a recent appraisal, you can estimate your homes market value by researching recent sale prices of similar homes in your neighborhood. A local real estate agent can assist you with this process. You can also get a general idea of your homes value by reviewing your tax statements for the assessed value of your home. A current home valuation, including clear pictures of the outside of your home, is required to determine how much equity you can borrow. When you apply for an equity loan/line of credit, your Processor will determine the type of home valuation or appraisal needed based on the details of your loan and can schedule it for you.

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Advantages Of Home Equity Loans

Homeowners can use a home equity loan to pay emergency bills, high-interest debt, or otherwise out-of-reach expenses.

Home equity loan settlement costs and underwriting fees are usually covered by your lender.
As interest rates for home equity loans are generally lower than the interest rates on student loans, home equity financing is often a more affordable way of paying for college or postgraduate school.
If you use a home equity loan or HELOC to âbuy, build, or substantially improve your home,â the IRS allows you to classify the interest on the loan as a tax-deductible expense.

Looking to purchase a second home?

Get in touch, buy your home, save thousands.

If You Decide To Cancel

Home Equity Loan Process

If you decide to cancel, you must tell the lender in writing. You may not cancel by phone or in a face-to-face conversation with the lender. Your written notice must be mailed, filed electronically, or delivered, before midnight of the third business day.

If you cancel the contract, the security interest in your home also is cancelled, and you are not liable for any amount, including the finance charge. The lender has 20 days to return all money or property you paid as part of the transaction and to release any security interest in your home. If you received money or property from the creditor, you may keep it until the lender shows that your home is no longer being used as collateral and returns any money you have paid. Then, you must offer to return the lenders money or property. If the lender does not claim the money or property within 20 days, you may keep it.

If you have a bona fide personal financial emergency like damage to your home from a storm or other natural disaster you can waive your right to cancel and eliminate the three-day period. To waive your right, you must give the lender a written statement describing the emergency and stating that you are waiving your right to cancel. The statement must be dated and signed by you and anyone else who shares ownership of the home.

The federal three day cancellation rule doesnt apply in all situations when you are using your home for collateral. Exceptions include when:

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What Determines The Variable Interest Rate Of A Home Equity Line Of Credit Shows Details

The variable interest rate is based on the Wall Street Journal Prime Rate as published in the Money Rates section. You can lock in all or any part of your outstanding balance into a fixed interest rate at any time with our fixed rate option. You can have up to 3 fixed rate options in place at any time.

Know Exactly When Your Draw Period Expires

Typically, a HELOCs draw period is between five and 10 years. Once the HELOC transitions into the repayment period, you arent allowed to withdraw any more money, and your monthly payment will include principal and interest.

Know when the draw period ends to adequately prepare yourself for the next phase. This will help you plan for necessary expenses and ensure that you have the funds available to help you with your lifes priorities, including those that may be in the future, says Michelle McLellan, senior product management executive at Bank of America.

Keeping track of your draw period can also help you determine whether you want to refinance the HELOC or begin putting money into savings to use toward paying down the principal during the repayment period.

However, if your HELOC balance is already at zero at the end of the draw period, your account will typically close automatically, McLellan says.

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What Can A Heloc Help You Do

In life, you often face major home improvement projects,

unexpected costs, education expenses, or the need to consolidate debt.

A home equity line of credit, or HELOC,

could help you achieve your life priorities.

At Bank of America,

we want to help you understand

how you might put a HELOC to work for you.

A HELOC is a line of credit borrowed against

the available equity of your home.

Your home’s equity is the difference between

the appraised value of your home

and your current mortgage balance.

Through Bank of America,

you can generally borrow up to 85%

of the value of your home

MINUS the amount you still owe.

For example,

say your homes appraised value is $200,000.

85% of that is $170,000.

If you still owe $120,000 on your mortgage,

youll subtract that, leaving you with the maximum

home equity line of credit

you could receive as $50,000.

Much like a credit card,

a HELOC is a revolving credit line that you pay down,

and you only pay interest on the portion of the line you use.

With a Bank of America HELOC,

there are no closing costs,

no application fees, no annual fees,

and no fees to use the funds!

Plus, Bank of America offers rate discounts

when you sign up for automatic payments,

as well as discounts

based on the funds you initially use when opening the HELOC.

AND there’s Preferred Rewards,

which extends benefits to you

as your qualifying Bank of America balances grow.

The interest rate is often lower

than other forms of credit,

but you should consult a tax advisor.

Remove Private Mortgage Insurance

Though you no longer need a 20% down payment to buy a home with a conventional loan, most lenders require you to purchase private mortgage insurance if you dont put at least 20% down. Despite the fact that the borrower pays for it, PMI only protects the lender. Most homeowners prefer to cancel PMI as soon as possible.

If you have a conventional loan, PMI is automatically canceled once you reach 22% equity in your home according to your regular payment schedule. However, you can request that your lender cancel PMI when you reach 20% home equity.

If you believe youve reached 20% equity due to a rise in your homes value, you can contact your lender to remove PMI as well. In this case, your lender will likely require an appraisal to verify the value of the home.