How To: Home Equity Line of Credit


Waypoint Real Estate Group knows that part of home ownership may be considering a home equity line of credit. We also know that the process can be daunting and confusing.

With  home values back on the rise, more homeowners are realizing home equity in their investment.  This opens up opportunity for many homeowners to use their homes equity to help finance renovations, college tuition and other big life expenses.

The first step is to consider which type of home equity program is right for you.  A home equity line of credit tends to have a variable rate and will let you draw on funds as they are needed, similar to a cash advance program.  A home equity loan would more likely have a fixed rate and the funds are distributed when the closing documents are signed.  The best advice Waypoint Real Estate Group can give you here is to have a clear and direct conversation with your bank. Let them know your needs and concerns and they can guide you toward the program that will work best for you.

Shop around. It’s ok to go to different banks and institutions and wait until you find one that you are comfortable with.   If you’re looking for a trusted lender to work with, give us a call.  We can point you in the right direction. Both local and national institutions might offer different home equity options. This process could take some time, so don’t rush it. Make sure you are happy with your options and working with a bank you trust. It’s a big decision.

Next you’ll fill out an application and get conditional approval within approximately 48 hours. There will generally be an application fee. Once the application is filled out, the bank will most likely request certain documents from you to check your information. If you would like to speed things up a bit you can have your documents already prepared. Common documents might include tax records, pay stubs and proof of insurance on your home.

The final step will be an appraisal of your home to calculate the difference between the home’s value and the current mortgage. Usually your bank will cover this expense. If the bank does not offer to cover this expense you may want to consider working with a different lender. Once the appraisal is conducted, and the amount approved, it’s time to sign your closing documents. All together, the entire home equity loan process will probably take around 30 days.

If you are considering a home equity line of credit and are curious about your home’s value, give Waypoint Real Estate Group a call.  We’ll be happy to provide you with a market estimate and answer any other questions you may have.

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