Home Equity Loan Process

April 20, 2018

Reviewed By: Amplify

If you’re in the market for a home equity loan or home equity line of credit, you’re part of a growing trend. Now that home values are incrementally rising, consumers are finding such loans a cost-effective and efficient way of funding home renovations, vehicle purchases and other important expenses.

At this point you may still be in the decision process and shopping around for the best rates. As such, now may be a good time to take an objective look at your current finances.

“You should have a good sense of where your credit and home value are before applying, in order to save money — especially on (your home) appraisal, which is a major expense,” advises author Casey Fleming on Investopedia. Fortunately for Amplify members, there are no appraisal fees on Amplify Home Equity Loans, and Amplify HELOCs only have a one-time $300 administration fee.

Home equity loans (HELs) are the vehicles allowing you to borrow a lump sum at a fixed interest rate, with monthly payments spread over a fixed term. Your home is the collateral that reduces the risk to your credit union or bank.

Variable-interest HELOCs similarly use your home as collateral but usually come with lower interest rates than credit cards, and you’re charged only on the amounts spent. The loan allows for minimum withdrawals of $4,000 for ongoing home renovations or other purposes.

So what can you expect when you decide to apply for a HEL or HELOC at Amplify Credit Union?

You settle on the amount of your loan request after determining your home equity. That’s the difference between how much your house is actually worth (i.e., appraised or market value) and how much you still owe on the related mortgage(s). By Texas law, the maximum amount lenders can issue for such loans is 80 % of home equity; if you already have a $40,000 mortgage against a home worth $80,000, then the most you can borrow is $24,000. Your HELOC limit also can’t exceed 80% of the market value of your home. Amplify may accept the market value on your county tax forms or request a third-party appraisal. Note that you may hold only one HEL at any given time and you’re limited to one per year (whether it’s paid off or not).
Due diligence requirements in Texas make the process last 30–45 days. Those needing funds in the meantime may apply for Amplify’s Homeowner Express Loan, which incurs higher interest rates but can be funded within 24 hours of approval. Express funds can be used as payments toward your lower-interest home equity loan or HELOC once it’s approved.
You complete the short contact form on our website.
An Amplify agent contacts you to learn more about your needs. If you’re ready to proceed, the agent completes your application over the phone. If not, you may contact us at any time in the future.
If moving forward, you have the option of giving permission for Amplify to complete the loan process almost entirely electronically through email and Docusign, a convenient electronic signature software that can be accessed from any device. Your other option is continuing to communicate via phone, mail and in-person paper and ink signatures.
Amplify gives you a checklist of all documents you must provide for review, including information related to your income, the collateral property and your other debt obligations. The faster they’re provided, the faster the decision. Examples include your last W-2 and tax return, earnings statements and other loan agreements. Factors we review include your credit and employment histories, loan-to-income value and debt-to-value ratio. The latter number should be less than 36, as it represents how much of your monthly income goes toward your mortgage, credit cards and car payments.
If the loan is approved, the loan moves into processing. You receive disclosures you must sign and submit.
By Texas law, you’re provided official notice of borrowers’ rights at least 12 days before closing.
Amplify works with you to establish a closing date and time convenient to you. No later than the day before, you’re provided an itemized list of all fees, points, principal and interest to be charged; Home Equity Loans have a closing cost of $300 and HELOCs have a $300 administrative fee.
The loan closes at an Amplify branch of your choosing. Texas dictates you (and not a representative) must be present at closing.
Under state law, you have three days to cancel the loan or to notify Amplify you will not be doing so.
Otherwise, you receive your funds on the fourth day after closing.