Technically, you can get a home equity loan as soon as you buy a home. However, home equity increases slowly, which means it may be a while before you have enough capital to qualify for a loan. It can take five to seven years to start paying your mortgage principal and start building up equity. Technically, you can apply for a home equity loan, HELOC, or cash-out refinance as soon as you buy a home.
There is no strict waiting period to get a home equity line of credit. These are secondary mortgage loans that offer homeowners a revolving line of credit. To get the HELOC, you need capital. If you have enough capital when you close your home purchase, you can get a HELOC in as little as 30 to 45 days, which is the time it takes for loan insurers to process your application.
They use this time to confirm that you meet the loan requirements for the new debt. The title company has to make two sets of titles, but any additional costs pales in comparison to the closing costs of a separate agreement. Sometimes refinancing your mortgage to withdraw cash can make sense, for example, if you have an FHA mortgage and want to refinance to a conventional mortgage to eliminate the mortgage insurance premium. Before you discuss the five options for obtaining equity in your home, make sure you understand these similarities.
If you’re considering withdrawing equity from your home, here are five ways you can do that, as well as the benefits and disadvantages of each.