Texas Home Equity Loans
Specific home equity loan and home equity line of credit (HELOC) rules and regulations apply to borrowers in Texas. For example, in the past some lenders would allow up to 100% loan-to-value for second mortgage products. However, Texans voted to limit the loan amount to 80% loan-to-value (LTV) for economic reasons. Additionally, another Texas regulation is that local borrowers can establish a HELOC for up to 50% of their home’s value as opposed to the standard 80%.
Also, according to the Texas Constitution, Texans can only have one home equity loan at one time and must wait at least one year before refinancing a home equity loan. This provision was added as consumer protection to avoid paying a plethora of closing costs and points each time the mortgage closed.
Texans in cities such as Dallas (75287), Grand Prairie (75051) and Forney (75126) are finding that using the equity in their home is the perfect way to finance projects and initiatives. Some borrowers are turning to the home equity line of credit (HELOC) to fund ongoing projects such as an extensive home remodel or paying perpetual medical expenses. A home equity line of credit is a variable rate line of credit where the borrower can make multiple draws against the line to make payments on a continuing basis.
A home equity loan is ideal for one-time expenses such as adding a new pool, a new roof or debt consolidation. A home equity loan acts like a traditional, fixed rate second mortgage product and the borrower makes regular monthly payments on the lump sum cash he or she receives.