With countless expenses rising today, you may wonder how it’s possible to find funding for your major home improvement projects. The good news is, you may have these funds accessible to you already, and a home equity loan makes it possible.
What Is a Home Equity Loan?
A home equity loan allows Illinois homeowners to borrow against the equity built up in their homes. Typically, lenders let you borrow 80% to 85% of your home’s current market value, minus any amount you owe on your current mortgage.
When you borrow funds using a home equity loan, your home acts as the collateral in a similar way to a mortgage, which is why these loans can be called “second mortgages”. Once you close on the loan, you have immediate access to funds that can be used for a variety of purposes, including paying for home repairs and improvements.
How Long Does it Take to Get a Home Equity Loan?
The amount of time it takes to get a home equity loan varies based on several factors, but it typically takes between two and six weeks. The process for acquiring a home equity loan starts with an online or in-person application that requires information about your finances and the property you’re borrowing against.
The timeframe for processing a home equity loan may be delayed depending on how long it takes you to submit the critical information needed, such as tax returns, pay stubs, bank statements, and employment verifications.
Do you need an Appraisal for a Home Equity Loan?
Most home equity loans do require an appraisal, which is the next step in the loan process after submitting your application to the lender. Lenders use an appraisal so they can understand your home’s current value and how much equity you have in place. An appraisal is also necessary because the lender uses your home as collateral for the loan.
Once the lending institution receives the appraisal report, it can accurately determine how much you may borrow and ensure you’re not borrowing more than what your home is worth.
Are There Closing Costs on a Home Equity Loan?
Typically, there are closing costs when getting a home equity loan, most of which can be paid through the closing. These costs often include: appraisal fees, application fees, title search fees, attorney fees, and sometimes even points (upfront fee the homebuyer pays directly to the lending institution in exchange for a reduced interest rate).
Closing costs can vary based on the financial institution and loan amount, but generally range from 2% to 5% of the loan. After submitting the application, you will receive a loan estimate provided by the lender, and it will outline the anticipated closing costs. It is possible to find a loan without any closing costs, but keep in mind these often have higher interest rates or enhanced fees.
Why Choose a Home Equity Loan from Peoples National Bank of Kewanee?
Peoples National Bank of Kewanee (PNB) has dedicated mortgage lending specialists in Illinois ready to help you with a home equity loan. Having loan specialists that offer local, “in-house” loans means we can get your home equity loan completed as fast and efficiently as possible.
Contact us today to find out how a home equity loan from PNB can make it possible to fund your home improvement projects.