Texas is the 2nd largest state in the country in terms of area. The population of the state is close to 30 million. Nicknamed The Lone Star State, Texas is known for cowboys, friendly people, sports teams, and diverse terrains. Many people in the state own their own homes. If you have equity in your home, a home equity line of credit might help you gain access to extra funds.
What is a Home Equity Line of Credit
For most people, your home is your most valuable asset. It is the largest bill that you pay each month. If you have equity in your home, a home equity line of credit can give you access to a large amount of money. This type of credit is secured by a lien on your house. You can write a check and withdraw money on your account at any time. This type of credit is comparable to a credit card. You will make payments on the amount of money that you borrow. Your home is used as collateral, so if you fail to make payments, your home is at risk.
How much Money can you Borrow?
You must have good credit to qualify for a home equity line of credit. If you have a good credit score and enough income, you can borrow up to 50% of the appraised value of your property. You subtract the amount you owe on your first mortgage. Your lender can tell you how much you can withdraw at one time.
Closing Costs for a Home Equity Line of Credit
You will still need to pay closing cost for a HELOC. You might pay an application fee, title search fee, and an appraisal fee. You might also need to pay for attorneys. These costs could add to the amount of your loan.
Lenders are required to give you a Truth in Lending Act. They must disclose the terms and cost of the loan, the APR, and the payment terms. They must be upfront about the amount you will pay to open an account. If you make payments, the lender cannot terminate your account or change the terms. After you have signed an agreement, the law gives you three days to cancel the loan without penalty. You are required to notify the lender in writing if you wish to terminate the loan. You are not obligated to pay any fees. Before you sign the papers, you must wait 12 days.
Advantages of a Home Equity Line of Credit
Home equity lines of credit in Texas have numerous benefits. Some of these advantages include:
- Pretty easy to open
- Low interest rate
- Affordable closing costs
- Tax deductible
HELOC does have its drawbacks. Some of the disadvantages include:
- Usually come with a variable interest rate
- Might be required to pay an annual fee
- Your home is collateral
With a home equity line of credit, you can borrow the money you need to pay for whatever you wish. Interest rates in Texas are low, so if you need extra money, research your options, and decide if a HELOC is right for you.