Texas home equity loans
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Texas home equity loans

Ponder the pros and cons before talking a mortgage loan ...

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The state of Texas, as a late arrival on the home mortgage lender scene, has more rules and regulations than Texas has armadillos. The Texas real estate laws were put into place to protect home owners from over extending their financial obligations and running the risk of losing their homes. Following are a few recommendations before galloping down the road in search of ways to free up the equity in your home.

Buying a home is the biggest purchase most people make in their lives. Purchasing a home and steadily making payments toward the mortgage creates equity in the house. An example of equity: if your home cost you $100,000 and you’re half way there with $50,000 yet to pay, you have $50,000 in home equity. However, in the state of Texas you can only borrow up to 80% of the fair market value. Let’s figure this out: Your home cost you $100,000 you’ve paid $50,000 and have $50,000 yet to go on the mortgage. How much can you borrow? $100,000 x .80 = $80,000 BUT you still owe $50,000. So… $80,000 – $50,000 = $30,000. You can borrow up to $30,000. Now that we understand home equity and how a mortgage works in Texas let’s move on.

Owning a home with equity is like having a locked box with no key. You know there’s something inside it but you can’t get to it without the key and unfortunately, you need to find the key. The key to freeing up the equity in your home may be to acquire a home mortgage loan. Following is a list of considerations to ponder that will help you to make a sound consumer decision in turning a locked asset into a liquid asset Texas style.

Ponder This:
Owning a home is part of the American dream and the state of Texas has put checks and balances into real estate laws to give home owners every opportunity to hold on to their slice of the American pie. You cannot lose your home because of failure to pay out of control credit card debt nor can you lose your home if you’ve been involved in an accident that far surpasses your insurance policy. Home mortgage loans are another animal completely. If you fall behind on payments the lender may foreclose and losing your home becomes a legitimate end result. Think long and hard whether you really need the money before beginning the process. If you need cash flow, only borrow what you need and not a dime more.

Interest rates on home equity may be lower, but the process of securing a loan comes with a price tag. Make sure you know what fees you will be paying. You may be accountable for closing costs and fees for processing documents.

Finding the best deal when it comes to a mortgage loan ensures that you get what you need. Only one home equity loan at a time is allowed in Texas. Also, you can not take out more than one loan per year even if you do pay it off in less than a year’s time. A home mortgage loan cannot be converted, even if a different lender offers a lower interest rate. Once you decide on the lending company and sign the papers, the deal is done.

You and you alone are responsible for understanding the loan and knowing the time frame for picking up the closing statement. If you fail to pick up the closing statement the day before closing, delays may occur which potentially may cost you more money. Fees such as re-processing documents or worse, interest rates rising before closing can affect the final costs, so be aware and be on time.

Think about having a Texas real estate attorney look over your contract with the mortgage company before you sign your name on the line. Read the document, and then read it again. Ask any questions that you have or demand explanations of parts of the document you don’t understand. Never sign any agreement without full understanding of what the provisions are within the contract.

Taking out a home equity loan is an important decision with dire consequences if the loan should default. Ponder the pros and cons before talking with a mortgage lending company. Knowing, at the very least, where to begin the thought process when it comes to home mortgage loans, helps you get a little closer to actually finding the key to opening the locked box. (don)
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