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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

The Fastest Ways To Cash Out Your Home Equity

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If you’ve paid a large portion of your mortgage or your home’s value has increased since you purchased it, you may have a significant amount of equity. Home equity is the value of your home minus your current mortgage balance. You can tap your equity to pay down debt, finance large purchases or meet other financial goals.

Typically, homeowners have three ways to access home equity — a cash-out refinance, home equity loan or home equity line of credit (HELOC). It’s important to consider the pros and cons of each and identify ways to ensure the fastest HELOC closing or get funds quickly through another home equity option.

How fast can you close on a cash-out refinance?

A cash-out refinance replaces your current mortgage with a new loan at a higher amount than what you currently owe. The new mortgage pays off the existing loan balance, and you receive the difference in one lump sum.

Borrowers can typically access up to 80% of a home’s value with a cash-out refinance and may use the loan proceeds for any reason. While cash-out refinances have higher interest rates than purchase loans or regular refinances, they have lower rates than other home equity products.

How to qualify

  Must have at least 20% equity in your home
  Must not exceed program loan-to-value (LTV) ratio requirements (80% to 90%, depending on the loan)
  Must meet your lender’s minimum credit score
  Must not exceed program debt-to-income (DTI) ratio requirements (41% to 50%, depending on the loan)

How long does it take to get the money?

Cash-out refinances can take around 45 to 60 days to close; however, the exact time frame depends on the loan type and lender. The refinance process is similar to taking out a purchase mortgage; you’ll need to provide details about your income and assets, and the lender will assess the home’s value to determine the loan amount.

To help ensure a smooth and timely cash-out refinance, gather your financial documents before applying. And be sure to respond to the lender’s questions promptly throughout the process. If you want to fast-track a cash-out refinance, look for lenders that offer an appraisal waiver and instead use an automatic valuation model (AVM) to determine your home’s value.

If you’re ready to explore a cash-out refinance, LendingTree’s cash-out refinance calculator can estimate your loan amount and monthly payment.

What to watch out for

If your home has a low appraisal value, you may not qualify for a cash-out refinance, or you may qualify for a much lower amount than expected. In some cases, you may challenge the appraisal. Also, you’ll pay between 2% and 6% of the loan amount in refinance closing costs. And if interest rates have jumped since you first took out your mortgage, you’ll be refinancing the entire loan balance at a higher rate.

How fast can you close on a home equity loan?

A home equity loan is an installment loan based on your home’s equity. Often called second mortgages, home equity loans have a fixed rate and monthly payment, and repayment terms range between five and 30 years. Borrowers can usually access up to 85% of their home’s value.

You’d receive the funds from a home equity loan in one lump sum and can use the money for any reason. Home equity loans can be a good option for consumers who want to borrow more than 80% of their home’s value or who wish to access their equity without refinancing their mortgage at a higher interest rate than their existing loan.

How to qualify

  Must have enough home equity (15% minimum)
  Must meet LTV ratio requirements (usually capped at 85%)
  Must meet your lender’s minimum credit score (often 620 or higher)
  Must meet your lender’s DTI ratio maximums

How long does it take to get the money?

Generally, the home equity loan process can take two to four weeks. The steps vary by lender but usually include applying for the loan, verifying your assets and income and underwriting the loan. Most home equity loans have a three-day right of rescission period after the closing, during which borrowers can cancel the loan for any reason.

To help ensure a smooth home equity loan closing, shop around for lenders before applying and look for lenders with shorter closing timelines. Another way to ensure a quick transaction is to have all your financial documents ready up front. Any delays in providing information or communicating with the lender can push back the closing.

LendingTree’s home equity loan calculator can help you calculate how much you may be able to borrow.

What to watch out for

Home equity loans typically have higher interest rates than other home equity options, and borrowers will pay approximately 2% to 5% of the loan amount in closing costs. Additionally, because borrowers use their home as collateral, they risk losing it if they can’t make the loan payments.

How fast can you close on a HELOC?

A home equity line of credit (HELOC) is a credit line based on your home equity. Interest rates are variable, and you can access funds as needed (similar to a credit card) within a predetermined time frame, usually 10 years.

When comparing a HELOC vs. home equity loan or cash-out refinance, HELOCs can be more flexible. You only pay on the amount of the credit line you access, and the initial payments are typically interest-only, making them much smaller than other home equity products. HELOCs can be appealing to borrowers looking for low payments up front or those who want flexibility in accessing their funds.

How to qualify

  Must have at least 15% equity in your home
  Must meet LTV ratio maximums (usually capped at 85%)
  Must meet credit score requirements (typically 620 or higher)
  Must meet DTI ratio maximums

How long does it take to get the money?

Securing a home equity line of credit typically takes two to six weeks from application to closing, but the exact time frame varies by lender. HELOCs also have a three-day right of rescission or cancellation period after closing.

To help guarantee the smoothest and fastest HELOC closing, shop around for lenders before applying and ask about their current closing timelines. Also, some HELOC lenders may not require a home appraisal and instead use an AVM. Eliminating a full appraisal can help ensure the fastest HELOC closing.

If you’re interested in a HELOC, LendingTree’s home equity calculator can help you crunch the numbers and estimate your credit line amount.

What to watch out for

Initial HELOC payments are low during the draw period but will increase if interest rates rise and when the loan enters the repayment period. Also, HELOCs often come with recurring maintenance or membership fees. Borrowers should also keep in mind that if they have trouble affording the payments, they could lose their home.

How fast can you close on a reverse mortgage?

A reverse mortgage is a home equity product available to homeowners 62 and older with a significant amount of home equity. It allows borrowers to convert the equity in their property into cash payments from their lender.

Older homeowners often leverage reverse mortgages to provide income, especially those with limited resources outside of home equity. However, this loan type comes with many fees, and borrowers are still responsible for recurring home expenses.

How to qualify

  Must be at least 62 years old
  Must own the home outright or have at least 50% equity
  Must live in the house for most of the year
  Must be current on federal debts and taxes
  Must be able to pay property taxes, homeowners insurance and home maintenance costs
  Must attend reverse mortgage counseling from a counselor approved by the Department of Housing and Urban Development (HUD)

How long does it take to get the money?

Reverse mortgages can take 30 to 45 days or more, depending on your situation. Lenders will need to confirm your financial information, property value and all other transaction details. Additionally, you must complete reverse mortgage counseling with an HUD-approved housing counselor.

To help ensure a smooth reverse mortgage process, borrowers should ensure they meet all eligibility requirements and prepare documents ahead of time. Also, looking into reverse mortgage counseling can help move things along.

Are you interested in exploring a reverse mortgage? LendingTree’s reverse mortgage calculator can help you see what you might qualify for.

What to watch out for

Reverse mortgage terms can be complicated and hard to understand, which can make potential reverse mortgage borrowers susceptible to scams. Be sure you’re working with an actual lender before providing any information.

Also, reverse mortgages have high costs and deplete your home equity. You or your heirs will usually have to sell the home to satisfy the loan balance. Additionally, most reverse mortgages have a three-day cancellation period.

Alternatives to tapping home equity

Personal loan

Personal loans are fixed-rate installment loans consumers can use for any reason. Borrowing with a personal loan may be faster than tapping into home equity — you could get approved within hours of applying and sometimes receive the funds on the same day. They’re also less risky since most personal loans are unsecured, meaning you won’t have to use your home as collateral.

However, interest rates on personal loans are generally much higher than on home equity products. And only borrowers with the best credit scores qualify for competitive rates. Repayment terms are usually shorter than home equity financing — averaging between two and seven years.

Credit card

Credit cards can be an easy and fast way to access funds. If you’re applying for a new card, you can often get same-day approval, which beats out even the fastest HELOC closing at two weeks. And if you qualify, you could get access to a high credit limit. However, using a credit card to fund a large purchase or ongoing expense is a costly way to borrow — unless you pay off your monthly balance — with average APRs in the double digits.

 

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