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Home Equity Loans- will one help you to meet your financial goals?

February 14th, 2008 11:58 AM

Texas Mortgage companies are allowed to do home equity loans- but only under very strict criteria unlike most other states in the United States. The legislature finally approved with voter consent a few years ago the ability to borrow against your equity in your home- but not without extremely strict criteria. This still leaves homeowners with much less flexibility than most states allow.

The biggest issue with Texas Home Equity guidelines is the restriction put into place whereby a home owner can only borrow up to 80% of their appraised value. Compared to other states, this is extremely restrictive. Most other states in the United States allows you to borrow from 100 to 110% of your appraised value. It is not at all unusual in other states for a homeowner to take out a home equity loan instead of a car loan. The reason this is advantageous is the ability to normally get a lower fixed rate on a home loan- and the fact that the interest is tax deductible on a home loan but not on other consumer debt.

It is rather frustrating for a homeowner in Texas to be bound by such restrictive laws. Special interest groups lobbied the legislature very hard to put these in place. Some special interest groups were concerned about consumer rights- but the largest lobby was in fact the Realtor lobby who really wanted consumers to have to sell their home to access their equity. The Home Equity loans are very good ways to use your equity to lower your overall debt service, and if you have any consumer debt at all you would be well served to look into a Texas Home Equity loan.

Another provision the legislature put into the Home Equity law is a 12 day waiting period from the time you apply for a loan until you are able to actually sign and close the loan. This was intended to allow a period of "contemplation" and for married couples both husband and wife must sign this disclosure.

Use the equity in your home to maximize your financial advantage- a home loan should be looked at as an important part of your overall financial plan- and not just a loan. While more restritive than other states home equity loan guidelines- the legislature at least finally helped Texans to tap into some of the equity in what is most people's largest single asset- their home. You can also use a home equity loan to do improvements to your property and increase the value of your home.

You can complete a preapplication by completing our Mortgage Fitness Check Up at http://www.legacyfinancial.com/

C. Chad Bates

President/CEO

Legacy Financial

Mortgage Lending the way it should be.

an Inc. 500 - 2002 company

Better Business Bureau Golden Torch Award Winner 2004

817-860-3232

Posted by Joy Bates on February 14th, 2008 11:58 AMPost a Comment (0)

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Do An Annual Refinance Review On Your Texas Home Mortgage Loan To See Whether A Debt Consolidation Loan Can Help You

February 15th, 2008 12:37 PM

Every home owner should do an annual "Mortgage Fitness Checkup" to determine if their home mortgage loan is the best loan for their particular needs. This review should entail asking several key questions. First, of course, is can you lower your interest rate on your loan? There are more than 300 different loan programs available in today's marketplace- each with a particular purpose and possible benefit. The next question you should ask yourself is whether you would benefit by utilizing some of the equity in your home to restructure your overall financial situation. Even if it means a higher interest rate- often times homeowners should refinance to consolidate their other consumer debt. The basic premise behind this concept is if you have debt- you want to have it secured by your home as home loans offer lower overall interest rates than other consumer debt and interest on our home loan is tax deductible, whereas other consumer debt interest expense is not. In Texas, we are limited to 80% of the appraised value for a debt consolidation, or home equity loan.

The next item that should be taken into consideration is how long you plan on staying in your home. For instance, if you plan to only stay in your home for 3 or 5 more years- you should consider an intermediate ARM (Adjustable Rate Mortgage) as the rates are lower than a longer term loan. The benefit of intermediate ARM's is that the rate is fixed for the initial term of either three, five, or seven years. Intermediate ARM's (Adjustable Rate Mortgages) are normally amortized over a thirty year period- but fixed for that initial term. Hence, you gain the security of a fixed rate- while lowering your interest rate as compared to a thirty year fixed rate loan.

Different "life events" may also be reason for review of your mortgage. What we mean by "life events" are things like adding children to your family, children going to college, children going off on their own, divorce, significant job change, significant change in your consumer debt level, etc.

In conclusion, take a few minutes to have a mortgage professional review your own unique needs and tailor your home loan to fit your financial plan. We should not look at a home loan as just a loan anymore- but as a financial tool and a very important component of your overall financial plan. Do this review annually as you will find that your needs and situation changes over time. You can do a "Mortgage Fitness Check Up" TM online in just a few minutes at http://www.legacyfinancial.com at no charge. You will simply need the details on your existing loan and it will take you less than five minutes to complete the process. It is important to work with a mortgage professional who will take your entire financial and life picture into account while doing the analysis to see if your mortgage you have now is good for you or if there are other mortgage products that would benefit you more.