Dreaming of renovating your kitchen, consolidating debt, or tackling another big financial goal?
A Home Equity Line of Credit (HELOC) can be a powerful tool for Texas homeowners. It offers flexibility, access to funds, and potential savings compared to other loan resources.
Its borrow-as-needed model often comes with lower initial payments, offering homeowners significant advantages.
However, the State of Texas has specific regulations. As the borrower, it’s a good idea to be a step ahead of the game and be informed about what you need to do to be a candidate for this type of loan.
At Texas United Mortgage, we're dedicated to helping you navigate these guidelines. This guide will walk you through the key requirements for securing a HELOC in Texas.
How to Qualify for a HELOC in the Lone Star State
To qualify for a HELOC as a Texas homeowner, there are several guidelines you must follow.
- Register your primary residence. A HELOC application can only be submitted for a primary residence. Investment properties, second homes, and vacation rentals are not eligible for a HELOC.
2. Ensure you don’t have any other existing home equity loans or HELOCs. The State of Texas only grants HELOCs to homeowners with no other active loans.
3. Wait a minimum of 12 months between loans. You must wait at least 12 months between HELOCs or other home equity loans—even if you haven’t used the full amount. This regulation is in place to protect Texas homeowners by promoting responsible home equity borrowing.
4. Borrow up to 80% of your home’s value. Texas law mandates that the total amount you owe on your home, including the HELOC and any existing mortgages, cannot exceed 80% of your home's appraised value.
This means you need at least 20% equity in your property to qualify.
For example, if your home is appraised at $300,000 and you have a $100,000 mortgage, the maximum HELOC you could likely obtain is $140,000 ($300,000 * 0.80 - $100,000 = $140,000).
5. Make sure your property meets condition standards. The home must be safe, sanitary, and structurally sound to qualify for a HELOC. Lenders will also want to ensure the home has reliable heating, plumbing, and road access.
6. Close in an authorized location. All closings must take place at the lender’s office, an attorney’s office, or a title company—never at your home.
7. Receive a 12-day disclosure notice before closing. Lenders must provide these terms and offer you a 3-day right to cancel after signing.
Securing a HELOC is an effective way to access funds and maximize your options as a Texas homeowner.
Interested in learning more about how a HELOC can work for you or find out today's rates on mortgage loans?
We invite you to connect with us at Texas United Mortgage today.
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