How Long Does It Take to Open a Home Equity Line of Credit?

The process to open a home equity line of credit can move very quickly if you are in need of fast funding. Since you are actually monetizing an asset, the loan takes less time for the lender to evaluate and fund. However, you may find a better option if you move slower when sourcing your loan. Ultimately, you will have to choose between speed and price when it comes to getting your home equity line.

What is a Home Equity Line of Credit?

A home equity line of credit is similar to a credit card; it is a revolving balance of very flexible financing. You will have a limit based on the amount of equity you place as collateral with the lender. At any given moment, you can spend up to that limit. You will be required to make minimum monthly payments based on the balance you carry. At any time, you can choose to pay down the balance and still keep the line open. Like a credit card, the line is open until you or the lender decides it needs to be closed.

How can I Open my Home Equity Line Today?

Most borrowers use a home equity line of credit to make purchases for their house. These may include furniture, appliances or improvements to the property. More immediate needs may arise, though, that require financing immediately, such as a wedding, home repair or emergency bill. As such, you may consider applying online for a line of credit immediately. It is easiest to do this with the lender who currently supplies your mortgage given the mortgage is in good standing. You may also apply directly with the bank that holds your accounts. Using a lender known to you will expedite the process.

What if I want the Lowest Rates?

Immediate online quotes are not typically the best deals on the market. Lenders take advantage of the fact you are a hasty shopper to mandate higher interest rates and less favorable terms. If you have the time to speak with a home equity broker directly, you may find better options. You can negotiate the terms, like electing for a lower limit, in exchange for a better interest rate. In total, your application filled out in person should only take a week or two to process. While this is not instantaneous, most people will find its worth the short wait.

What Happens if I Default?

Rushing into a home equity line of credit is also not advisable if you do not understand the risk you are assuming. Even though your primary mortgage holder still holds the deed to your house, the home equity lender will become an additional lien holder on your property. You are agreeing to forfeit the equity you place down as collateral on the loan if you default. Your home equity lender can purchase your primary mortgage, even if it is in good standing. If this occurs after you default on your home equity, then you can end up in foreclosure with few little options to remain in your property.

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