Applying for a home equity line of credit can be a tiresome experience. There is a lot of thinking that goes before, during and after you apply. To help you out, here is a list of do’s and don’ts that can help you through the process.
- Before you apply for home equity line of credit, first you need to check if you already have loans and debts in your name, for instance, a student loan, car loans, etc.
- You must know the market value of your house, as well as the original purchase price.
- You must provide an appointment letter or any other document that could verify your current employment. Apart from that, any pay slips confirming your income and expenses will be required.
- Complete detail of the amount that you need to borrow will be needed.
- You will have to have an up-to-date loan amount.
- Finally, your personal information will be required, that includes your name, date of birth, address, phone no., as well as another no. in case of emergency.
While you apply
This is basically your to-do list when you apply for home equity line of credit.
- Look for different lenders. Do not go for the first lender you find. Instead, look at the different options that are available to you, so you can compare their loans to get the best one of them.
- Once you have at least three lenders who are available to you, you must compare their services.
- The next step is to apply. You can do this online. Most lenders are now available online. Therefore, all you need to do is fill out a form, and the rest is a piece of cake.
- Before they sign your home equity line of credit, the lenders would want to inspect your property.
- When the lenders will have all the information above they will approve you. To run the process further smoothly, they might now ask you for more information.
Think it through…
There are things you must inquire lenders about.
- Some lenders have an introductory rate. You should ask them about the rate, and also the time to which it will be applicable.
- You must know the interest rate that you will be required to pay.
- Ask the lenders about how long the draw period would be.
- You must also ask the lenders about the minimum withdrawal. Not all lenders ask you to pay a minimum amount of money each time you draw. However, you must inquire about the rate from the ones who do ask for it.
- Some lenders will also require you to pay a fee if you are inactive with your home equity line of credit. Make sure you are clear about it.
- You must also inquire lenders about the minimum amount of balance that you have to borrow to get the home equity line of credit signed.
- Make sure to ask the lenders about penalties. Some might require you to pay an amount if you happen to pay off your loan before time.