Finding a home equity loan credit line or cash out refinance used to be difficult in Texas, but new laws may have opened up opportunities. Learn more about Texas HELOC loans in 2024.
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Texas Law Revisions Expand Home Equity Loan Programs Statewide
Current laws on the books in the state of Texas make it difficult, if not impossible, for homeowners to take out a second mortgage on their property if they have a limited amount of equity in their home.
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There is a proposed amendment, however, which would make it possible for prospective buyers to use Texas Home Equity Conversion Mortgages from the FHA to purchase a house.
These types of loans are often referred to as reverse mortgages and they allow individuals to put the existing equity in their home to use. A reverse mortgage is most commonly used by individuals 62 years of age or older who are looking to use the equity that they have on their home to cover other financial obligations, or to provide them with additional spending money so they can enjoy their retirement years and style.
Of course, the housing crisis over the last few years has dramatically shifted the way that both lenders and borrowers are able to do business. With greater restrictions and regulations put in place to ensure that individuals do not receive loans that they will not be able to pay, many individuals are finding that they do not have nearly as many options available to them as they once did. Or, at least it seems that way.
This particular amendment would make it possible for individuals to put to use the programs available from the FHA when traditional lenders are not able to meet the needs that they have. It is easy to understand, however, why these additional regulations have been put in place, especially when a person takes a moment understand the housing crisis was caused largely by subprime loans taken out by individuals who could not afford their monthly mortgage payments.
When these individuals went into default, the flood of foreclosed homes and defaulted loans caused the national median home value to drop and put a virtual freeze on new home buying.
In order to ensure that this type of situation does not occur again, regulations have been put in place to ensure that everyone is able to fulfill their financial obligations whether they are purchasing a new home, refinancing their existing home, or looking to put the equity that they have on their home to use in other areas of their life. It is also important to keep in mind that a reverse mortgage or second mortgage is not the best choice for everyone or for every financial situation and an individual should carefully consider all of their options.