A Home Equity Loan2 is a type of loan that is secured against the equity (ownership) you've built up in your home. That's what makes them a low-rate financing option for large expenses like a home improvement project, a child's education, or consolidating loan payments with higher interest rates.
A Home Equity Loan lets you access your available home equity in the form of an installment loan with predictable monthly payments over a fixed term. Unlike a HELOC, Home Equity installment loans have a fixed interest rate and let you pay back the loan by making the same monthly payments over the entire term. You can choose a term between 5 and 20 years.
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A home equity loan is perfect for financing home improvement projects both large and small. Unlike retail financing options and credit cards, a CUTX home equity loan comes with a low, fixed interest rate that can save you thousands in interest over the life of the loan compared to a credit card.
Homeowners that need to consolidate and lower their monthly payments across multiple loans may want to consider a home equity loan. Combining balances into a fixed-rate loan can help facilitate faster payoffs and potentially help save money on interest.
Using a home equity loan to pay for large expenses such as school tuition and fees is a common way to avoid the need for other types of higher-rate loans. Be sure to apply for your equity loan in advance to allow enough time to close and fund your loan before tuition is due.
If you're interested in tapping into your home's equity and using the funds to invest in things like home improvements, someone's education, and other expenses, enroll in CUTX's Home Equity Email Series. You'll get a no-pressure series of occasional emails with helpful information about making the most of your home equity.
Use the CUTX Available Equity Calculator to see how much home equity you have and how much you might be able to borrow in a home equity loan. Once you determine the amount and term you want, simply apply online.
Once you've applied online and completed your application, a CUTX loan specialist will work with you to gather any necessary documents in order to process your loan.
Your CUTX loan specialist will coordinate with you (and your co-borrower, if applicable) to plan and set a closing date. All borrowers must bring a valid government-issued ID to the closing.
After the closing, there is a 3-day waiting period, after which CUTX will fund the savings account set up for you to draw the loan from. If you're using the loan for consolidation, make sure you immediately use the funds to pay off the debts you intended to consolidate so that your pay-off balances do not continue to increase.
CUTX Home Equity Loans have much lower interest rates than other types of credit, such as credit cards or unsecured personal loans. They have fixed monthly payments which can be very low, with payment terms of up to 30 years. Plus, if you use them for home improvements, the interest may be tax deductible—ask your tax professional.
And CUTX charges no prepayment penalties.
In Texas, you can borrow up to 80% loan-to-value (LTV), a measure of how much you owe compared to the value of the home. At CUTX, the minimum loan amount is $25,000 and the maximum is $250,000 for first liens. Use CUTX’s Available Equity Calculator to get an idea of how much you might be able to borrow.
CUTX has competitive fees for Home Equity products and the exact amount of the fees are dependent on the type of loan. A Home Equity Specialist is available to answer any questions you have regarding specific fees.
The home must be in Texas, not zoned agricultural and be single family, owner-occupied. That includes houses, condos, townhomes or duplexes. CUTX does not do home equity loans or mortgages for mobile homes or manufactured homes. Borrowers can only have one Home Equity Loan at a time.
Aside from the list of guidelines and restrictions set by the state of Texas, there are few disadvantages to home equity loans. Borrowers that do not qualify for a home equity loan may still have other loan options available to them.
Some borrowers do not feel comfortable taking out a new loan against their home once they've already paid it down. But as long as you intend to repay the loan in full, there's nothing wrong with using a home equity loan to get a lower interest rate.
1 - Credit Union of Texas offers a variable Annual Percentage Rate (APR) based on the Prime Rate as published in the Money Rates section of The Wall Street Journal (the “Index”) plus a margin. As of September 19, 2019, the Index value is 5.00% and the margin rate is 0.20%. The floor APR will be 3.00%. An increase in the Index will result in an increase in the periodic rate which, in turn, will result in higher payments. In no event, will the APR increase by more than 18% or the maximum rate allowed by applicable law. Offer is limited to consumer HELOCs and Home Equity Loans not currently held at Credit Union of Texas. First payment date is 30 days after closing. Property insurance is required, including flood insurance where applicable. The minimum advance during the draw period is $4,000. No closing costs. If, however, an appraisal or a policy of title insurance is required, applicant is responsible for those costs. Texas homestead properties are limited to 80% combined loan to fair market value for home equity financing. All loans are subject to credit approval and Credit Union of Texas lending policies. Other restrictions may apply. In Texas, there is a 12-day cooling off period on all HELOCs. There is also a three-day right of rescission after closing before the funds may be disbursed. Actual time of funding may differ depending on appraisal, title and other underwriting requirements. This is a limited-time offer and is subject to change at any time without notice. The account is subject to application, credit qualification, and income verification; additional evaluation and verification criteria may apply. Your actual APR will depend upon your credit transaction and credit history and will be determined when a credit decision is made. CUTX home loan programs are only available in Texas. Membership in CUTX is required.
2 - NMLS #576560 Credit Union of Texas provides home equity loans and home equity lines of credit through its affiliate Texas Mortgage Lending, LLC, NMLS #1641703.
