HELOC (Home Equity Line of Credit)
Did you know that in Texas, until about 25 years ago, you could not access the equity you had in your home?
Until then there were only 3 methods of creating valid lien against homestead. Those 3 ways were:
You could borrow to buy;
You could borrow to build;
Or you could borrow to pay certain taxes; (wasn’t that nice of them to allow that?)
In the days of Reconstruction, Texas created homeowner protections which stood until about 25 years ago when the legislature made new laws that allowed Texans some access to their home equity.
The new methods are called Home Equity Loans. A Home Equity Line of Credit or HELOC is one of those methods.
A HELOC is essentially a loan taken out against the equity of your house. Unlike a standard HEL, your line of credit is replenished as you pay it off, and you can draw from it again. For example, if you pay off ten thousand dollars of the loan, you can later take another ten thousand out of that loan should you need it. There are guidelines about how much equity you can borrow, usually around eighty-five percent of your home’s total equity.
It should be noted, however, that any type of home equity loan can be risky. After all, you are risking the roof over your head. Take careful consideration before going through with any home equity loan and please consult a financial professional.