Bill Morris

HELOC Anyone?

Just a couple of years ago, even in a very conservative banking state like Texas, you could get a very attractive home equity loan or line of credit for almost any purpose.  I have recently learned just how much that has changed.

I have a client here in the Austin area looking for an investment property who wishes to use a home equity line of credit to supplement a significant cash investment to make the purchase.  This couple is debt-free, including 100% equity in their primary residence.  So far it seems that the kind of financing that would make sense for them is no longer available.

This is not the kind of financing that I am involved with every day, but I have a great loan officer at a major national bank working on it.  In the process of researching this for my client I found this article scheduled for tomorrow's Austin American-Statesman:

Home equity loans harder to find

"Traditional 30-year mortgages are unusually affordable by historical standards, but if you're looking for a home equity line of credit, don't expect any deals."  More:  http://www.statesman.com/business/content/business/stories/personalfinance/2009/11/08/1108equity.html

Texas was late, and reluctant, to allow home equity borrowing of any kind.  State law still allows a homeowner to borrow a maximum of 80% of appraised home value, less outstanding liens.  Moreover, the process requires a "cooling off period" of at least 12 days after "loan application and notice of borrowers rights" before the home equity loan or line can close, and even then the borrower has a 3-day right of rescission after closing.  This is NOT what anyone would call "loose" credit.

The client that brings this subject to my mind wishes to borrow only about 20% to 25% of home equity, in a market where the value of that home has actually gained value during the past year.  This should be a lender's dream customer.  Instead, what we have is a testament to just how cautious lenders have gotten.  If you needed any more evidence that the times have changed, this is it.

Bill F. Morris, ABR, CRS, CDPE, e-PRO, MBA
RE/MAX Capital City
Call or Text:       512-785-3345
Toll-Free:           1-800-692-8784, x 162
Email:                 
bmorris@remax.net
Web:                   www.eHomesByMorris.com  

Your personal referrals are the best measure of my success!

Comment balloon 0 commentsBill Morris • November 07 2009 07:49PM
HELOC Anyone?
share
Just a couple of years ago, even in a very conservative banking state like Texas, you could get a very attractive home equity loan or line of credit for almost any purpose. I have recently learned just how much that has changed. I have a… more
Higher mortgage rates on the way?
share
Those of us inside the real estate and mortgage industries have been conscious of this coming change for several months, but this article appeared today on Wall Street Journal MarketWatch: Investors see mortgage rates rising as Fed wraps up… more
Texas Vote, November 3, 2009
share
I have posted on this over the past few weeks, but if you didn't take advantage of the early voting period in Texas, then Tuesday is the day for you to vote and protect your interests. Please make to time to vote YES for these important amendments… more
20407 Sunset Strip, Lago Vista, Texas
share
Like the Texas Hill Country? Love Lake Travis? Then you'll want to see this home. 1701 SF, 3 BR, 2 Bath, on 0. 35 acre, on a quiet street. Far enough into Lago Vista to give you privacy and the sounds of the country, but still convenient to… more
Tax Credit Extension?
share
Well, a news report this morning said Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan recommend that Congress vote to extend the tax credit for first-time homebuyers beyond the current November 30, 2009 expiration date. Reports over… more
Time To Buy? Now!
share
As of today, the First-Time Homebuyer Tax Credit is still set to expire on November 30, 2009. Of course, there are proposals to extend, and possibly, expand that incentive for at least a few more months, but there is nothing certain, except that… more