Getting Pre-approved

Getting pre-approved for a home equity line of credit (HELOC) or home equity loan requires applicants to have their financial standing reviewed with the goal to determine whether they can repay the loan.

From the perspective of the lender, they are looking to minimize risk and not over extend the borrower to the point of default.


A HELOC is a line of credit where borrowers use the equity in their home as collateral to secure the loan. It’s a preferred method of accessing funds because using home equity allows borrowers to access more money and possibly receive a lower interest rate.

What do Lenders Look for?

While parts of the application process are complex or even a bit mysterious, most lenders want applicants to understand the formula and how they can put themselves in the best position to be approved.

Income, assets and a limited amount of debt are important boxes to check off the list. Equity in one’s home, though, might be the most important. Under most circumstances, someone can only borrow against their home after they’ve bought enough equity, which happens as more mortgages payments are made.

Each application is reviewed independently. Applicants who are self-employed, for instance, can still receive pre-approval but they might need a guarantor or a higher down payment. They might also have to provide proof of income and show stability.

Potential Red Flags

There are aspects of an application that will raise red flags for any lender. If an applicant doesn’t own enough equity, they might only qualify for a low amount or they might have to wait.

HELOCs are a resource for people to weather financial storms or to keep themselves afloat if they lose their employment or to invest in a business or their property. Unemployment might hurt your application because a lender wants to make sure you can repay the loan. Their goal isn’t for you to lose your home. It’s to leverage your home to access funds that you otherwise would not be able to.

If you are considering applying for a HELOC, it’s best to speak with a trusted professional who can guide you through the application process.


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