How Long Does It Take to Get & Process a HELOC?
Do U have a home project that you are just itching to finish? Or, a vacation you and your family have been dreaming about for (what seems like) forever? Maybe a wedding or other special event is coming up, and you want to make sure it’s perfect?
If it’s important to U, it’s important to Me (us)!
A home equity line of credit (HELOC) is a line of credit secured by your home and gives you a revolving credit line to use for large expenses. At UMe, our HELOCs are something to brag about. We give you easy access to funds and offer a low, 12-month introductory rate!
Keep reading to learn more about the HELOC process, how long it takes to get a HELOC, and more.
What Is a HELOC?
Simply put, a HELOC is a type of second mortgage that allows you to borrow against the equity you own in your home. It is a revolving line of credit with a variable interest rate, fixed term, and a defined repayment period. Your credit limit is based on how much equity you have in your home.
While HELOCs have variable interest rates which can change whenever the federal rates change, UMe’s HELOC rates only change twice a year. Plus, we have a max cap rate increase of 2% change (again, only twice a year!).
HELOCs are broken into two periods: the draw period and the repayment period.
- During the draw period, you can borrow up to your credit limit and make interest-only payments. This period is usually 10 years.
- At the end of the draw period, you enter the repayment period. In this phase, you are no longer borrowing money but paying back any outstanding balance plus interest. The repayment period is typically another 20 years.
You can use the funds from your HELOC to pay for just about anything! You can also borrow as much or as little as you need, once approved. From college tuition to home renovation to debt consolidation—HELOCs are a flexible choice for many.
Is a HELOC Right for You?
At UMe, we know that every situation is unique. That’s why we offer many options to help you reach your financial goals. While a HELOC is a great borrowing tool, it should be useful for your specific circumstances.
The first step in deciding if a HELOC is a good choice is to make sure you have enough equity in your home to qualify and determine how much you can borrow. Typically, if you have 20% equity or more in your home, you will qualify for a HELOC.
At UMe, we offer HELOCs to members who own 20% equity in their homes, meaning you’re borrowing up to 80% of your home’s value. If you are borrowing 60% or less of your home value, you will gain access to even lower interest rates. Another UMe HELOC perk!
When considering whether a HELOC is right for you, remember that HELOCs are secured by your home. Therefore it’s very important that you are able to pay back the funds, because the loan is tied to your home.
What’s a quick way to know that a HELOC is not the right choice for you? If you’re planning to move soon. If you are looking to sell your home soon, a HELOC would not be a great fit.
How Long Will the HELOC Process Take?
It’s important to know how long the HELOC process takes so you can plan accordingly. In general, HELOCs can take two to six weeks from applying to closing. However, since many factors are at play in the process, you should be aware that the time can sometimes take longer than six weeks.
But we know that if you’re applying for a UMe HELOC, you’re likely planning to use it for something special you have your heart set on—like a new kitchen or a wedding—and therefore you want the funds as quickly as possible.
This is where UMe shines and delivers for U! We work very hard to process UMe HELOCs faster than other lenders, and typically provide funds within two to four weeks—so you can start turning your dreams into realities right away!
HELOC Steps
Let’s review the process of securing your HELOC—from application to closing—so you have a better understanding of the timeline.
Application
If you believe you’ve met the qualifications above and are comfortable with the length of time it may take to get a HELOC, you’re ready to apply. With UMe, you can start the application online 24/7 or apply in person or over the phone. We make it easy for you to get started on your HELOC journey!
For the application, you’ll be asked to provide the most recent/current versions of the following:
- Mortgage statement showing balance owed
- Two months of pay stubs
- Tax return
- Homeowner’s Insurance Policy
- Loan contract, showing your interest rate, term, and monthly payment
Terms and Requirements
Once you’ve been approved, you will review the loan’s terms and requirements. This includes the HELOC’s interest rate, the total loan amount, the draw period, and the payment schedule.
Understanding the terms and requirements before moving forward with the process is key. UMe financial professionals are always on hand to answer questions.
Home Appraisal
Since your home is used as collateral with a HELOC, it will need to be appraised. This is a standard appraisal process aimed at finding out how much your home is worth.
Home Equity
Hand-in-hand with the appraisal is determining how much equity you own in the home. This figure is known as your loan-to-value (LTV) ratio. Basically, it’s a calculation of what you own on your mortgage compared to your home’s current value.
As we said earlier, owning 20% equity in your home will usually secure you a HELOC at a good rate. This is the same thing as an 80% LTV.
If you have other loans against the property, such as liens, those figures will also influence your home equity level.
Underwriting
Just as with your primary mortgage, a HELOC will go through an underwriting process. This is the final step in determining whether your HELOC is approved. Your credit history, income, and assets will be analyzed, as well as the market value of your home.
Closing
Once you’ve been approved, it’s time to sign the paperwork and finalize the loan. Remember that closing costs may be involved and will usually be a percentage of the total amount you’re borrowing.
Reaching the HELOC Finish Line With UMe
If you’ve decided to apply for a HELOC and feel comfortable with how long the HELOC process takes, UMe is here to help. A HELOC (or any other type of loan) is a big decision and responsibility. That’s why it’s a good idea to take that journey with an organization that knows you and your story.
If you want a strong, competitive HELOC in Burbank, our friendly and helpful professionals at UMe Credit Union are here to help U!
Get started today by learning more about our HELOCs.
Disclaimer: U matter to Me (all of us) at UMe — and that’s why we do our best to deliver helpful information on our blog. Please note the following: (1) UMe Credit Union works hard to make certain that the information we post here is as accurate as humanly possible. But as you know, information can change and evolve quickly. While we try to update the blog on a regular basis, the content of some older posts may not be correct or up-to-date. (2) Some destinations on the World Wide Web that we link you to will exist on external websites. UMe Credit Union does not officially endorse any connected sites, nor do/did we compensate or get compensated by any entities to be featured in our posts (unless otherwise noted). (3) Everyone’s situation is unique and we advise you to consult with our personal bankers or your finance, tax, or legal professional for advice individualized to you!