![]() ![]() The program makes no restrictions on the types of repairs, has no required improvements, and has no minimum amount of repairs. For homeowners who want to stay in their homes, a rehab loan is an excellent alternative, allowing the homeowner to finance renovations.Ī rehab loan is a fixed rate, fully-amortizing loan. When homeowners outgrow their homes, they often think it's time to sell their homes and move on. A second mortgage can be preferable if you have a low interest first mortgage. These loans offer you the ability to get money for home improvement, debt consolidation, or many other reasons without disturbing your first mortgage. 2nd MortgageĪnother way to tap your home equity is using a second mortgage. However, the interest rate is not fixed, so your payment will change as rates change. ![]() As with a standard home equity loan, the total amount borrowed against your home cannot exceed 80% of the value of your home.Ī home equity line of credit gives you flexibility, and the interest you pay may be deductible on your income tax return. Your maximum loan amount is determined by your available equity. With a line of credit, you borrow only what you need and you pay interest only on what you borrow. If you want the flexibility to borrow against your home equity whenever you want, a home equity line of credit may be the solution for you. In this case, the Constitution allows you to take out up to 90% of the value, and the other Texas Home Equity Loan restrictions do not apply. When one ex-spouse buys out the other from their principal residence, we use an Owelty Deed to partition the property. The Texas Constitution limits the amount of equity you can take out of your home with a cash-out refinance to 80% of its value - except in situations of divorce. This does not apply to second homes nor investment properties. The Texas Constitution allows you to tap into your home equity only to the extent that your home value exceeds your mortgage balance by at least 25% and only once every 12 months. As an added benefit, mortgage interest may be deductible on your income tax return while interest on most other debts is not. Mortgage interest rates tend to be lower than interest rates for other debts, and you can spread out the payments over 30 years. The desired result is a lower total payment. A home equity loan allows you tap that equity to pay off those debts by consolidating them into your mortgage. Some people in this situation also find themselves saddled with other high interest rate debts. ![]() If your home is worth more than your mortgage, then you have equity locked up in your home. An obvious disadvantage is that the interest rate, and thus your mortgage payment, may increase over the life of the loan. As a rule, the lower the start rate the shorter the time before the loan makes its first adjustment.Īn advantage of ARM's is that the lower interest rate may allow you to buy a more expensive home. This start rate usually is fixed for a period of time ranging from 1 month to as long as 10 years. Likewise, if the index drops, your monthly payment will decrease.ĪRM's generally begin with an interest rate that is 2 to 3 percent below the comparable fixed rate mortgage. If the index moves up, your monthly payment will increase. The index moves up or down based on the conditions of the financial markets. Adjustable Rate Mortgage (ARM)Īn ARM has the characteristic that its interest rate adjusts periodically based on a specified index. The disadvantages are they typically have a higher interest rate, and the rate does not drop if rates go down. The main advantage of fixed rates mortgages is the rate is fixed, so you are protected if rates go up. A typical 30-year fixed rate mortgage takes over 20 years of level payments to pay half of the principal balance. As the loan is paid down, more of the monthly payment is applied to principal. The most common fixed rate loans are 15-year and 30-year mortgages, but other terms are available.ĭuring the early amortization period, a large percentage of the monthly payment is used for paying the interest. Second, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term. First, the interest rate remains fixed for the life of the loan. This, the most common type of mortgage program, has two distinct features. Please review this information and give us a call to discuss which option best meets your needs. Below are some of the many loan options available to refinance your home. ![]()
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