A home equity line of credit is one of the most affordable ways to borrow money from a bank. The fact that these lines of credit are secured against the borrower’s home equity allows the lenders to offer very low-interest rates and high values. They offer a large degree of freedom, as the money can be used for anything that the borrower needs, and can even be refinanced in case of an emergency. This having been said, getting a HELOC is not a particularly easy process.
There are several moving parts that both borrowers, as well as lenders, need to consider before coming to an agreement. Generally speaking, requesting a HELOC and having the application accepted can sometimes take over 30 days. However, this time can be shortened by doing a few things prior to submitting your application to the bank.
- Establish the Value of Your Home
A home equity line of credit needs to be secured against the equity that the borrower has in his home. This means that a full appraisal may be required, depending on how much the real estate market has changed since the borrower has bought the home. Go to the bank and ask if the appraiser can be brought in by the client or if the bank has its own specialist. If borrowers can have their home appraised and then submit the results to the bank, it is advisable to do that as soon as possible. This can cut 3-4 days off of the application process.
- Give Your Credit Rating a Boost
Generally speaking, having an ample financial history that lenders can look at is useful, however, having many outstanding debts or a low credit rating can, in fact, lengthen the eligibility process. Try to pay off your credit cards before applying for a HELOC. Also repay your any short-term loans that you may have, such as payday advances. This will not only give you a slight credit boost but also shorten the time it takes the lender to approve your request.
- Ask the Bank Clerk to Send You a List of Requirements
Most bank clerks will be able to send you a list of all the documentation that is required to get a HELOC. Most of these documents must be submitted by the borrower, and it is better to have them prepared when first going to the bank to discuss the line of credit.
- Get Your Papers in Order
Make sure that all the required documentation is in order. Half of the cases where the approval process for a HELOC is slowed down is due to a mistake in spelling or an error in the documentation. Go through all of the papers that you need to submit and make sure that the addresses, names, personal identification details, and signatures are spelt correctly and clearly visible. Furthermore, keep the documents together so that you don’t forget anything when going to the bank.
- Send the Documentation Digitally (Email or the Bank’s Website)
Some banks allow their clients to send in the documents needed for loans through email. While it is usually better to submit them yourself, to a bank clerk, so that he may explain if anything is not in order, it can be faster to send the documents digitally. This is usually a foolproof method if you have constantly been in contact with a bank representative and have followed his instructions regarding the required documentation. Sending the documents digitally enables bank clerks to redirect them to the headquarters faster, further reducing the evaluation time.