Texas HELOC Loans vs. Home Equity Loan

A HELOC is a revolving line of credit secured by the equity in your home. Unlike a traditional home equity loan, which provides a one-time lump sum distribution, a HELOC allows you to borrow as needed up to a predetermined credit limit. This means you can access funds multiple times during the draw period, giving you greater flexibility and control over your finances.

How Does a HELOC Work in Texas?

HELOC loans typically have two phases: the draw period and the repayment period.

1. Draw Period: During this phase, you can borrow money as needed up to your credit limit. You’ll only pay interest on the amount you’ve borrowed, not the entire credit limit.
2. Repayment Period: After the draw period ends, you’ll enter the repayment phase. During this time, you can no longer draw funds, and you’ll start repaying both the principal and interest on the borrowed amount.

Benefits of a Texas HELOC Loan

• Flexible Financing: Whether you are planning a home improvement project, consolidating debt, or covering unexpected expenses, a HELOC provides the flexibility to use the funds as you see fit.
• Competitive Interest Rates: HELOC loans typically offer lower interest rates compared to credit cards and personal loans.
• Tax Benefits: In many cases, the interest paid on a HELOC may be tax-deductible—talking to a tax advisor is important to know how this applies to you.

HELOC Loan Requirements & Eligibility

• Homeowners need to have enough equity in their home and a solid history of making repayments.
• A favorable debt-to-income ratio ensures a homeowner’s total monthly debts do not overtake a critical percentage of gross monthly income.
• Typically, the property must be the borrower’s primary residence, yet second homes or investment properties may be considered as well with more stringent requirements.
• Properties in good condition and located in stable or appreciating markets are preferred. Single-family homes, townhouses, and condos are usually eligible, while mobile homes and co-ops might not qualify.
• An official appraisal will determine the home’s current market value, which directly affects the amount you can borrow. Additionally, an inspection may be required to assess the property’s condition and identify any issues that could impact its value.

Why You Should Choose Texas Regional Bank for your HELOC

Opting for a HELOC loan from a community bank like TRB offers several advantages larger banks cannot. With expertise spanning many regions across Texas, TRB combines personalized and tailored financial advice with local decision-making, leading to faster approvals, more flexible terms, and more nuanced perspectives often overlooked by larger institutions.

Providing flexible borrowing options, competitive interest rates, and the support of TRB’s trusted lenders, a HELOC can help you make the most of your home equity. Ready to explore your Texas HELOC options? Contact Texas Regional Bank today to speak with one of our financial experts or make an appointment to find out how a HELOC loan can benefit you or visit our Mortgage – Home Loans & Refinance from Texas Regional Bank website.