About Home Equity Loan
Many homeowners want to know information about their home equity and how to use it. What are the home equity loan products available for their major expenses?
Let us understand two types of home equity loans in Texas, and why would you need them.
What Is Home Equity Loans In Texas?
A home equity loan is a second mortgage that is borrowed against the remaining equity on your house after the first mortgage. The amount of the loan is decided on the property value and your current 1st mortgage balance.
In HEL borrower gets the entire loan in a lump-sum amount. HEL is usually shorter in term compared to 1st mortgage. The guidelines for a home equity loan in Texas vary from that of the other states.
What is the Home Equity Line of credit in Texas?
Unlike the HEL Home Equity Line of Credit (HELOC) is a revolving credit line with a specific limit just like credit cards. This credit line is given to the borrower against the equity in the house.
With the HELOC borrower can choose how much money to withdraw from the allocated credit line.
And will be making the payment only on the amount withdrawn. HELOC is one of the most popular home equity loans in Texas.
How to obtain HEL/HELOC in Texas?
To get a home equity loan in Texas, an individual should have an excellent to good credit history. Also, the loan to value should not exceed 80 % of the property value, which would also include your 1st mortgage.
The rest of the procedure is very similar to refinancing with cash-out. The choice depends on the borrower to opt between a line of credit or a home equity loan.
Why HEL/HELOC?
HEL/HELOC is usually obtained to cover significant expenses such as home repairs, college educations, medical bills, or paying off any unsecured debts with a high interest rate.
Let’s say you have several credit card debts with high interest rates. You can opt for HEL/HELOC and pay off the credit card debts, and get a lower interest rate under one single payment.
To obtain home equity loans in Texas, get in touch with your current bank or your trusted loan officer.
Conclusion
Though this looks like a beneficial and smart financial move, you have to consider your intentions thoroughly before you tap into your equity, as failure to make the payments on HEL/HELOC may risk your property towards foreclosure.
Talking to your loan officer would give you better knowledge about obtaining any of the home equity loans in Texas.