Home equity lines of credit are capped at line amounts established during the underwriting process. Most banks allow customers to apply for an increase to an existing home equity line of credit rather than refinance it into a new loan. Modifications are less expensive than new lines because in most states, intangible taxes and state document fees are based upon line amounts. A line increase affects the available credit but does not lengthen the term of the original loan.
Call the bank holding the existing home equity line. Set up an appointment to meet with a loan officer. Ask what documents are required to take a loan application.
Go to the bank. Give the loan officer the account number of the existing loan. Ask the officer to enter an application for a line increase. Provide the banker with income verification, homeowners insurance, warranty deed and ID. Any co-owners or co-borrowers listed on the existing loan must also provide their income information and ID. The loan officer will review the credit and income to determine eligibility. The bank will order an electronic or full appraisal of the home. Agree on a time for a follow-up appointment.
Go to the second appointment. Discuss the home value, debt-to-income ratio (DTI) and credit bureau reports. The loan officer will tell you the maximum increase you can qualify for and the applicable interest rate-tiers. Decide whether to increase the line of credit to the maximum or a lesser amount. Arrange a loan closing.
Close the loan. Some banks may require an immediate draw on the additional funds. If necessary, withdraw funds from the line and transfer them to your checking account.
