At Flagstone Mortgage, we specialize in helping borrowers find the right mortgage loan for their unique situation. Whether you're a first-time homebuyer or an experienced homeowner, we can help you navigate the mortgage process and find the loan that's right for you.
Texas HELOC Loans Explained
What is a HELOC Loan?
Can You Get a HELOC Loan in Texas?
Yes! In Texas, there are two main options for tapping into your equity in Texas: home equity loans and home equity lines of credit (HELOC).
If you choose a home equity loan, you will receive a lump sum of money that you can repay over time with fixed monthly payments. This option is ideal if you have a specific amount of cash in mind that you want or need to borrow. Additionally, home equity loans typically offer more affordable interest rates compared to credit cards, personal loans, or other financing options.
HELOCs in Texas
A HELOC, short for Home Equity Line of Credit, works similarly to a home equity loan. It allows you to borrow against the equity in your home and utilize your property as collateral. However, instead of receiving a one-time payment, you can borrow from a line of credit and repay it gradually. It is important to note that a HELOC carries similar risks to a home equity loan, including the potential for foreclosure.
HELOCs operate much like credit cards - they allow you to borrow up to a predefined limit as and when required, over a certain period. The key difference, however, is that interest is only accrued on the portion of the credit line you utilize.
Many HELOCs offer the benefit of only paying interest on the borrowed sum during the draw period, which typically extends from 5 to 10 years. Once the repayment period initiates (generally lasting 10 to 20 years), you will then begin repaying the borrowed amount plus accumulated interest.
Benefits of Choosing a HELOC
- Flexibility: HELOCs are perfect if you are unsure about the funds needed for a given expense. With no obligation to commit to a lump sum, you can borrow only what is required during the draw period.
- Low closing costs: With HELOCs from Flagstone Mortgage, you can expect lower closing costs and origination fees compared to traditional home equity loans.
Points to Consider Before Opting for a HELOC
- Variable interest rates: It's worth noting that HELOCs generally employ variable interest rates, which means they may alter over the lifespan of the credit line. Consequently, your monthly payments may fluctuate, making planning for consistent repayment amounts more challenging.
- Avoid Overspending: Given that you can borrow up to your credit limit, it's crucial to exercise discretion to avoid overspending and potentially compromising your financial security.
HELOC Frequently Asked Questions
Q What is the difference between a HELOC and a Home Equity Loan?
Q How is the credit limit for a HELOC determined?
Q Can the interest rate on my HELOC change and how often?
Q What happens if I sell my home while I have a balance on my HELOC?
If you sell your home, you are generally required to pay off your HELOC in full from the proceeds of the sale. The HELOC is secured by your home, so selling the home means you no longer have the collateral that backs your line of credit.
How To Get A Mortgage in 5 Steps
Here's How We Close The Deal in 30 Days Or Less
Flagstone Mortgage provides a simple and easy-to-follow five-step process to help you obtain a mortgage and buy your dream home. This includes applying for preapproval, obtaining an approval letter, searching for a property, verifying the details, and closing the deal. Our personalized mortgage solutions and expert guidance make each step straightforward, so you can secure financing, find the right home, and complete the closing process with ease.
Obtain Approval Letter
Search for a Property
Underwrite Your Loan
Closing The Deal
Apply for Mortgage Preapproval
The first step towards getting a mortgage is to apply for preapproval.
Preapproval is a thorough process where the lender evaluates your income, assets, and creditworthiness to determine how much they are willing to lend you.
Unlike prequalification, preapproval requires you to provide proof of your income and debt obligations, ensuring that you are eligible for the mortgage. Flagstone Mortgage's preapproval process is quick and easy, and it will help you understand the exact amount of money you can borrow.
Knowing this amount will make it easier for you to narrow down your property search and make you more attractive to sellers and real estate agents.
This Makes You A Competitive Buyer
Once you have found the ideal mortgage solution that aligns with your needs, you can apply online to see if you're approved. If approved, we will issue a Prequalified Approval Letter that you can use to start searching for a home.
To increase your chances of approval, you may consider reaching out to our Texas Home Loan Experts to discuss in greater detail your specific situation.
Find Your Dream Home
Now it's time for the exciting part - finding your dream home. We recommend enlisting the services of a local real estate agent to help you with your search, especially if you're a first-time homebuyer. A knowledgeable realtor can help you narrow down your search and find properties that fit your budget and preferences.
Once you've found the right home, your agent will assist you in submitting an offer and negotiating with the seller. If your offer is accepted, you'll be ready to move on to the final stages of the home-buying process.
Ensure The Numbers Match
During this stage, an underwriter takes a closer look at your financial and asset information to ensure that you meet the lender's requirements and can afford the mortgage you're applying for. The underwriter will also review the property details to ensure that the property meets the lender's requirements. If everything checks out, the underwriter will issue a loan approval, and you can move on to the final step, "Closing the Deal".
Additionally, your lender will verify the details of the property you're purchasing, which typically includes ordering an appraisal, verifying the title, and scheduling any necessary state-required inspections. Once the underwriting process is complete, you'll receive a Closing Disclosure document.
The Closing Disclosure document provides comprehensive information about your loan, including your monthly payments, interest rate, down payment, and closing costs.
The Final Step
Once your loan is approved, Flagstone Mortgage will schedule a closing meeting where you'll have the chance to ask any last-minute questions about your loan. It's crucial to bring a valid photo ID and a cashier check or initiate a wire for your closing costs to ensure a smooth closing process.
During the closing, our team of experts will guide you through the process of signing the loan documents and completing the final paperwork. Once you've signed and the loan has been funded, you'll officially become a homeowner. At Flagstone Mortgage, we strive to make the closing process as stress-free and easy as possible, so you can focus on enjoying your new home.