What to expect during the home equity loan closing process

Navigating the home equity loan closing process

Taking out a home equity loan may open the door to various financial opportunities. However, understanding the details of the home equity loan closing process might feel like trying to decode a complex puzzle while blindfolded. Don’t worry, though! The process can be broken down into clear steps and timelines:

• Start at the beginning: The home equity loan closing process is like the grand finale of a fireworks show – there’s plenty of anticipation and excitement. This is the stage where all the legal and financial aspects come together, and you officially seal the deal on your loan. It’s the moment where you dot the i’s, cross the t’s, and celebrate because you successfully unlocked the equity in your home.
• Gather the documents: Before you cross the finish line, you’ll need to gather together several documents. Think W-2 forms, pay stubs, tax returns, mortgage statements, and various other personal financial records. Your lender will let you know what they need to review and when they need it – they will check these records to determine that you’re a responsible borrower who is likely to repay the loan on time.
• Anticipate an appraisal: Your lender will order an appraisal of your home to determine its current market value. This value is essential for finding your current CLTV ratio and may ultimately impact the interest rates you can qualify for. There are different methods for conducting an appraisal that your lender may use, so be sure to ask what to expect before you apply.
• Dive into the disclosures: As you continue to wade through the closing process, various disclosures will be sent your way. These documents give you the rundown on all the details lenders are required to provide before you close on your loan. They disclose the terms, conditions, and potential risks associated with your new loan. Make sure to read them carefully, and don’t hesitate to ask questions if something doesn’t add up.
• Sign on the dotted line: Last but not least, it’s time to sign on the dotted line. This moment is the climax you’ve been waiting for – the lender provides you with a final agreement, and once you’ve reviewed it, agreed to it, and signed it, your home equity loan is officially locked in.

Remember, the home equity loan closing process might seem like a whirlwind of jargon and formalities, but at its core, it’s a journey toward utilizing the equity you’ve built in your home. Take it one step at a time, and celebrate each milestone along the way.

How long it takes to close on a home equity loan

The process of getting a home equity loan will vary depending on homeowner and lender details. With Discover® Home Loans, the loan process from initial application to funding typically takes between 5-7 weeks. That time breaks down like this:

• Getting the basics (around 1-2 weeks). Apply online or over the phone to review your loan options, then upload required documents. We’ll confirm your initial eligibility.
• Processing your info (around 4 weeks). We’ll gather third-party information about your home and then send your complete application to underwriting for a final decision.
• Closing you loan (around 1-2 weeks). We’ll contact you to schedule your closing and then arrange for your loan funds to be sent to your accounts.

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