Texas Home Equity Loans

December 25, 2007

Texas has weird home equity loan rules:

80% Maximum Home Equity Rule:  This means your home equity loan can’t exceed 80% of your home’s value.  So if your home is worth $150,000, your Texas Home equity loan can’t exceed 80% or $120,000.   (Investment home equity loans guidelines are less strict.  You can pull more equity out of an investment property; up to 85-90% depending on your credit.)

3% Finance fee limit:   The total fees charged by everyone (lender, underwriter, bank, title, attorneys, etc) can’t exceed 3% of the loan amount.   Most home refinances require a title policy which will run between 0.75-1% of your loan amount.   The 3% rule is supposed to curb excessive fees, but in realty, it makes it harder for people with smaller home values to get access their equity.     We at mylendingplace have some bank programs that will pay your closing costs; allowing you to net more.   Naturally, these rates are slightly higher.  

 Did you know that mortgage brokers have more lending sources than a stand-alone bank?  This is why more than 80% of home loans are done through the licensed mortgage brokers like mylendingplace.com.

15-Day rule:   We can’t close your Texas Home Equity loan for 15 days.   Then, once we close, we can’t fund your loan (you can’t access your money) until after 3 days.  This 3-day period is called the “right of rescission”  phase.  Basically, the state of Texas requires you to think about your home loan for 12 days, then wants you to have an additional 3 days to really think about your home equity loan:)  Altogether, it takes around 20-25 days.

 Most people think the only way to gain access to their home’s equity is to sell the home–but the best way, and cheapest way, is to do a home equity loan.  This is a great way to pay off bills, get out of consumer debt, pay high-interest credit cards off, buy investment properties while your home continues to appreciate.   When I help a client with a home equity loan I save them between $300-$1000/month.       After we close, I suggest taking some of this savings and paying extra on your new loan so you’ll pay it off in 12-20 years; not 30 years.  

 If you’d like to learn more about a Texas Home Equity loan, please call my office at 512-996-8194 or cell at 512-577-2958

Jon Spears

jon@mylendingplace.com

Posted in Financial planning begins with the right mortgage