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

What is a home equity loan?

Each time you make a mortgage payment, you increase the level of ownership you have in your home. The value of your ownership is called equity. You can calculate the amount of home equity you have by subtracting your mortgage's remaining balance from your property's current market value.

Once you build enough equity, you can use your home for collateral to borrow money through a home equity loan (“second mortgage”) or home equity line of credit (HELOC). When you take out a home equity loan, you receive a lump sum payment. A HELOC provides an open line of credit you can draw from as needed.

Lenders determine how much they’ll lend you with a home equity loan by reviewing your income, credit score, debt-to-income ratio (DTI), the amount of home equity you’ve built and the current value of your house.

What are home equity loans used for?

Homeowners take out home equity loans for a variety of reasons. Some of the most common uses include funding home improvements, business startups, college tuition, emergency expenses or debt consolidation.

However, because your home is on the line, it’s important to only use a home equity loan if the interest rate is reasonable and you can afford the payments.

» MORE: How to use home equity

How long do home equity loans take?

While the time frames may vary, securing a home equity loan could take a couple of weeks or a few months.

Here are the typical steps of securing a home equity loan with approximations on how long each step could take:

1. Get prequalified. While optional, it may help you save time by letting you know if you qualify and how much you can expect to get. Filling out an application typically only takes about 10 minutes, and the lender may respond in a few business days.
2. Choose a lender. Shopping around for different lenders to compare rates and terms may help you secure the best deal. This process can take anywhere from a couple of hours to several weeks.
3. Apply for the loan. After you select a lender, you can apply for the loan. The lender will likely ask several questions about your personal information, employment, debt, property, etc. The application could take an hour or more.
4. Get an appraisal. Some lenders require a licensed appraiser to determine your home's value. This step could take anywhere from one to three weeks or even longer, depending on the size and value of the property.
5. Underwriting. Once the appraiser submits their report to the lender, an underwriter will review your application and decide whether to approve the funding. Underwriting could take several days or weeks.
6. Close. If approved, you’ll need to meet with the lender to sign loan documents with a notary (and possibly an attorney). Under the Truth in Lending Act (TILA), you can reconsider the loan within three days of closing. After the three-day grace period, the lender can disburse the funds, which could take up to two weeks.

Factors affecting a home equity loan processing time

When you apply for a home equity loan, various factors can affect the processing time.

• Your organization: Preparing documents ahead of time can speed up approval. The lender may want proof of your income, a current mortgage statement and a property tax bill.
• Appraisal time: Depending on the appraiser’s schedule and the size of your home, the time it takes to receive the report may vary.
• Underwriting: Lenders often have several qualification requirements. If the lender needs additional information, it could take longer to approve your application.
• Closing time: Once it’s time to close on the loan, you’ll need to set up a meeting with the lender to sign the paperwork. If your state requires an attorney to be present for closing, coordinating the schedules of all the parties involved may take some time.

How to speed up the home equity loan process

While some factors affecting the home equity loan process are outside your control, there are ways to expedite it.

“When gearing up for a home equity loan, staying proactive is your secret weapon,” said Joe Camberato, CEO of National Business Capital, a fintech lending platform. “Get your documents organized and respond ASAP when your lender reaches out.”

Disorganization can easily slow down the process if you're scrambling to find the correct information and documents. If you put off returning your lender’s calls, it could take longer for them to file the necessary paperwork.

“Before you submit anything, give your documents a thorough review,” Camberato said. “You want to avoid any surprises, so double-check everything. Know your credit score well, and if there's anything that might raise questions, be ready with a clear explanation. This way, you can navigate the process smoothly and efficiently.”

» MORE: How to get a home equity loan with bad credit

Bottom line

If you need additional funds, you can borrow money with a home equity loan and use your home as collateral. This type of loan can serve many purposes, including financing home improvements, educational expenses, business ventures or debt consolidation.

While the timeline for securing a home equity loan can vary greatly, it’s important to know roughly how long it could take to receive funding to ensure it’s the best financing option for you.