How Long Does It Take to Get a Home Equity Line of Credit?
When you purchase a new home, you may find offers for a home equity line of credit pouring through the mail. As far as lenders are concerned, these loans are very low risk and profitable. They have a large source of collateral, your home, that they can potentially call in if you default. Home owners also tend to be more responsible borrowers, and lenders trust you have good credit if you were able to get a mortgage. As a result, you can get a home equity loan very quickly. However, moving fast can create negative consequences for you.
- Terms of collateral: With a home equity line, you are placing your home on the line as collateral. Just because your mortgage is in good standing does not mean you are safe from foreclosure if you default on a home equity line. You should understand when and how your home equity lender can foreclose on your collateral to make sure your home is safe if you get behind on payments.
- Variable interest rates: Home equity lines are often extended with variable interest rates. They may be offered in a "no interest" package through the mail. This rate is not permanent, though, and you may find your rates go up tremendously within a short period of time.