It’s time to make some big changes. Ready to finally get to that bathroom remodel you’ve been dreaming about? Thinking about a new car, or consolidating some of your outstanding debt?
You know what a HELOC is , and that a potential increase in home value could mean you have more collateral available for borrowing. But, do you know how the HELOC application process works? All banks and lenders do it slightly differently, but here’s how we handle the HELOC application process at Santander Bank. Let our HELOC checklist guide you through, step by step.
HOW TO APPLY FOR A HOME EQUITY LINE OF CREDIT
Step 1: Check Your Credit Score
Before you begin your HELOC application, it may be helpful to take a second to check out your credit score. Your lender will look at your score during the decision process, so it’s best to go in with your eyes wide open. If it’s not where you want it to be, take some time to learn how to improve your credit score.
Step 2: Get Organized
You don’t want to start your application and then have to stop and look for a bunch of paperwork, especially if you went into a nearby bank branch. Take the time to gather up what you’ll need to fill out the initial application. While it may vary depending on who your lender is, you’ll likely need:
- Social Security Number
- Income information and employment history
- Information about your home, including your full mortgage balance, mortgage payments, taxes and insurance information
- Information related to your other outstanding debt and regular monthly payments
If you’re planning to apply jointly, don’t forget to have the same information available for your co-applicant!
Step 3: Filling out the Application
There are several ways to apply for a Home Equity Line of Credit. At Santander Bank, you can visit a nearby bank branch , call a Loan Specialist, or apply for a Home Equity Line of Credit online. If you’re filling out the application online and have all your necessary documents ready to go, the process shouldn’t take too long. But if you have questions about a Home Equity Line of Credit, talking on the phone or in person with a Loan Specialist is a great idea! No matter where you fill out your application, you’ll need to provide your personal information, your income, employment and existing debt, and a request for how much you would like to borrow. You will also need to provide information about the collateral you wish to pledge, in this instance a house you own, such as your mortgage balance, monthly payments, taxes and insurance.
Step 4: Verify Your Income
After your application has been received, a Loan Specialist will contact you to verify your income and let you know what documents you need to provide. This includes your income from your employer, which can be verified with pay stubs or a W-2, but there are other sources of income which require proof too. For example, if you receive income from a rental property, a pension, or alimony, you’ll have to include verification documents for that as well.
Check out a full list of the required income verification documents for Santander Bank and how to submit them.
Step 5: Wait for Your Initial Decision
We know, waiting can be the worst. But, within 3 business days, the loan underwriter will send you a letter with the initial credit decision along with the terms and conditions if approved. The loan underwriter will review your credit history, including your credit score and any outstanding payments you may have, and compare to your current income. This calculation is called your debt-to-income ratio. They will also review the amount of any existing mortgages, add the amount of your loan request and compare that to the estimated value of your home (known as the loan-to-value ratio).
Don’t worry – Even though it’s only an initial decision, the end is in sight!
Step 6: The Appraisal Process
There won’t be too much for you to do for this step. Your bank or lender will now assess the current value of your home, which will confirm how much equity you have available. An appraiser may need access to your home to make this determination, however this is not always required.
Step 7: Closing Time
Break out the champagne and start practicing your signature! After the appraisal, your lender will reach out and let you know if you have received final approval and the terms of your agreement. They will also schedule a closing date with you. You, and if applicable your co-applicant, will need to come into your preferred branch and sign on the dotted line.
Step 8: Hold the Line!
Need time to read through everything? Once everything is official, you have 3 business days to review the documents and can decide not to proceed to open the line of credit with no cost or obligation, unless your HELOC will be secured by an investment property.
Step 9: Your HELOC Awaits
On the fourth day after closing, you will now have access to funds in your line of credit up to your maximum line for the length of the draw period, unless your HELOC will be secured by an investment property. You’ll be able to receive funds either by writing a check, visiting a branch, or making an online transfer from your line of credit into your Santander checking account. Talk to your branch representative to discuss how best to access and manage your brand new Home Equity Line of Credit.
Not that bad, right? Now that you know how to apply for a HELOC, go get started!