The following questions and answers appear in no particular order, and are not intended to be entirely definitive answers to your questions. We simply want to provide some basic information, which we feel may be helpful to you.
- What is Home Equity, and what are Home Equity Loans?
- What will it cost to obtain a home equity loan?
- What will the interest rate be?
- How long a term will I be able to get for a home equity loan?
- For what purpose will I be able to use the home equity loan proceeds?
- Can I get a home equity line of credit?
- I’ve heard about a "reverse annuity mortgage" equity loan. Can I get one of those?
- When will I be able to apply for a home equity loan?
- Where will I be able to apply?
- How long will it take to get an answer on my application?
- What information will I need to provide or bring with me when I apply?
- Where will I be able to sign the loan papers, i.e., where will I close my loan?
- Can I payoff all my credit cards with proceeds from my home equity loan?
- After my loan has been approved, how soon may I get the money I want to borrow?
- Once I have my loan, can I make early payments, or can I pay the loan off early?
- I live in a rural area. Can I get a home equity loan on my property there?
- Can I go to any branch location in order to sign my home equity loan papers?
- Will the interest rate be fixed, or variable?
- I want my loan proceeds immediately after I sign my loan documents. May I have the cash right away?
- Can a loan be set up with an automatic debit for the payments?
- How can I (will you) determine the equity value I have in my home?
- I want to do some improvements to my home and maybe some other things too (like go on a nice vacation). Can I do these things with a home equity loan?
- My relative in another state told me he could get an equity loan where his financial institution pays him each month. Can I do that here in Texas?
- I want to refinance my 1st mortgage, and get some of my equity out. Can I do this?
- Will my payments vary?
- Can I have more than one home equity loan at a time?
- Can I use all the equity that I have available in my property?
- I understand that there is some kind of "cooling off" period in these home equity loans. What is that all about?
- Will my home equity loan provide me with a tax deduction?
- There seem to be a lot of restrictions on how and where and when I can use the equity in my property. Who is responsible for this?
What is Home Equity, and what are Home Equity Loans?
Home equity
is the value of an individual’s home, less any outstanding balances owed against the home. A home equity loan occurs when a property owner borrows funds from a lending institution, like SACU, using his equity as the collateral, by offering the lender a lien against his property. In Texas, homeowners will be limited to borrowing up to 80% of the value of their home, less any outstanding balances.What will it cost to obtain a home equity loan?
While there will be some costs incurred in making a home equity loan, it is uncertain at this time as to what costs, if any, will be passed along to our members. Standard fees for services like title opinion, flood certification, filing, appraisal, etc. will be paid by someone, however some lenders, including SACU may choose to waive these fees, at least initially.
What will the interest rate be?
SACU home equity loan rates vary depending upon the amount to be borrowed, and the term of the loan. Contact an SACU home equity lender at (210)258-1806 for the rate that best suits your needs.
How long a term will I be able to get for a home equity loan?
The maximum term at SACU will be fifteen (15) years.
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For what purposes will I be able to use my home equity loan proceeds?
As the saying goes, "any old thing your heart desires." The amendment did not specify that a borrower could only use a home equity loan for certain purposes. You may consolidate your debts, take a trip, buy a car, pay for a child’s education, or fix up your house. You can use the loan proceeds for anything you choose.
Can I get a home equity line of credit?
No, this type of loan will not be available here in Texas. Other states have this loan product, but the Texas state legislature did not include home equity lines of credit in the amendment approved in the November 4, 1997 general election.
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I’ve heard about a "reverse annuity mortgage" equity loan. Can I get one of those?
No. While this type of loan, available in other states, was included in the amendment written by the legislature, and approved by the people of Texas, SACU has elected not to offer this product at this time.
When will I be able to apply for a home equity loan?
SACU is presently accepting applications. Please understand that home equity loans may not be disbursed until January 1998, no matter when you submit an application.
Where will I be able to apply?
Applications will be available at any SACU branch location, as well as at the Main Office. This will include all of our San Antonio and Houston area branches. Applications will also be taken over the phone by our Member Service Center staff, and through Loan Connection our automated telephone loan application system, and here, on the SACU web page.
How long will it take to get an answer on my application?
While each application will be somewhat different from every other application, the expectation is that a decision will be reached within two hours of when the application arrives in the Second Lien Loan Department. The approval may be "subject to" certain additional information being provided by you or verification of other data, but this will be communicated directly to you by one of our loan officers.
What information will I need to provide or bring with me when I apply?
Bring pay stubs or vouchers, as well as data about the debts you owe, including any liens against your home. In addition, bring along your most recent property tax statement, which will help us to determine your equity position. Your homes tax valuation will be the most critical part of the equity loan decision. The legislature limited loans to no more than 80% of the fair market value of the subject property, less any existing debt, so this will be a very important computation. Finally, please bring a copy of your warranty deed or deed of trust.
Where will I be able to sign the loan papers, i.e., where will I close my loan?
The legislature mandated in the amendment, that home equity loans may be closed only at the offices of (1) the lender, or (2) at an attorney’s office, or (3) at the office of a Title Company. If you are using the funds to purchase a car, for instance, you will have to close at one of the three cited locations, and then go to the auto dealer’s place of business. The same would go for a home improvement dealer or contractor, or any other service provider that you may wish to pay with proceeds from your equity loan. Your loan can be closed only at one of the three cited locations.
Can I payoff all my credit cards with proceeds from a home equity loan?
As cited above, you may use your loan proceeds in any manner you see fit, including the payment of outstanding debts, credit cards included. The amendment does stipulate that a lender (SACU for instance) may not require that you pay off existing unsecured credit balances and secure them by means of the home equity loan property lien. You might choose to consolidate such debt, but that would be strictly up to you.
After my loan has been approved, how soon may I get the money I want to borrow?
The state legislature has mandated that a loan may not be closed before the twelfth (12th) day after an application has been submitted, or the required Notice Concerning Equity Loan Extension of Credit has been provided, whichever occurs last. Following the closing, the home equity amendment further mandates a three day rescission period before funds may be tendered. SACU will interpret this latter requirement as being three business days. Thus the answer to the question is at least twelve (12) days after the disclosure is tendered until the loan is closed, and then at least three additional days to allow for the rescission period, depending on what day of the week the closing took place.
Once I have my loan, can I make early payments, or can I pay the loan off early?
The answer to both questions is yes. There is nothing in the amendment to preclude you from paying something extra with each payment, so as to speed up your payoff date, and reduce your interest expense. SACU’s home equity loans will carry simple interest, and the amendment specifically prohibits any kind of early payment penalty.
I live in a rural area. Can I get a home equity loan on my property there?
Possibly, If you have a rural, agricultural use, property tax exemption, then the answer is no. If, however, you do not have such an exemption, then you may be able to obtain a home equity loan.
Consult an SACU loan officer for specific information about a home equity loan on your rural property.
Can I go to any branch location in order to sign my home equity loan papers?
SACU will schedule closings at several of its branch locations. Specially trained "Closing Specialists" will schedule your closing with you at a time and place convenient for you.
Will the interest rate be fixed or variable?
The amendment allows for a lender to charge either a variable or a fixed rate. At present, SACU will offer only fixed rate loans.
I want my loan proceeds immediately after I sign my loan documents. May I have the cash right away?
Assuming the twelve-day cooling off period has already expired, allowing the loan to close, you will still need to wait for the three-day rescission period to expire before loan proceeds will be made available. This requirement cannot be waived. No money can be made available at the loan closing, as defined by the Texas equity loan amendment.
Can a loan be set up with an automatic debit for the payments?
Yes, an automatic loan payment can be established, even one coming from another financial organization. An automatic debit for an SACU home equity loan from your SACU transaction account may help qualify you for a special rate. Ask a loan officer for details.
How can I (will you) determine the equity value I have in my home?
First, you will need to know what your property is worth, i.e., what is its value. The simplest way to determine this is to find out the county tax valuation. From the property value given on the tax valuation, subtract any outstanding lien balances still owed. The difference is the equity value. The Texas equity loan amendment however, will then only allow a loan for an amount up to 80% of the total valuation, less the outstanding balances. If, for instance, your home was valued at $100,000, and you owed $55,000 against it, your equity would be $45,000. You could only borrow $25,000 in an equity loan, however, in that 80% of the $100,000 would be $80,000, and you still owe $55,000. Consult the equity loan calculator found elsewhere on our home page.
NOTE: A person may have only one home equity loan at a time, as defined in the Texas equity loan amendment. Back to Top
I want to do some improvements to my home and maybe some other things too (like go on a nice vacation). Can I do these things with a home equity loan?
Yes, you could do these things, but you would be limited by the 80% rule, as set out in the home equity amendment. SACU can and does make home improvement loans up to, and, in some cases, over 100% of a property’s value. If you would like to do more than one thing with your home equity loan, SACU suggests you contact a loan officer directly for information specific to your situation.
My relative in another state told me he could get a home equity loan where his financial institution pays him each month. Can I do that here in Texas?
Yes, some lenders may offer this type of equity loan. SACU, however, has chosen not to offer this product at this time. Called a Reverse Mortgage Annuity, this type of loan will only be available to those who are at least 55 years of age and who attend a special education seminar, among other requirements.
I want to refinance my 1st mortgage, and get some of my equity out. Can I do this?
Yes, you may do this, as long as the amount of new money "taken out" does not bring the total balance owed to more than 80% of the total value of the property you own.
No. Your principal and interest payments should not vary during the loan. The amendment states that payments are to be "substantially equal," and your SACU loan will comply with this requirement.
Can I have more than one home equity loan at a time?
No. According to the language in the equity amendment, an individual may only have one (1) equity loan outstanding at a time. You may, however, also have a home improvement loan (or two), and a 1st mortgage loan, assuming your loan officer does not object to all these credit accounts and that you can afford all the payments.
Can I use all the equity that I have available in my property?
No. The language in the home equity amendment limits a homeowner to using a maximum of 80% of the fair market value of the property, less what may be presently owed to other lien holders.
I understand that there is some kind of "cooling off" period in these home equity loans. What is that all about?
The legislature appears to have desired that homeowners be absolutely certain that they wanted to use the equity they have in their home to secure a loan before they entered into any kind of loan agreement. So, they wrote into the equity loan amendment that an equity loan may not close until the twelfth (12th) day after the date an application is submitted and/or a required Notice Concerning Equity Loan Extension of Credit disclosure is provided to you, whichever came later. Should you decide to withdraw your application during this period, you may do so.
Will my home equity loan provide me with a tax deduction?
In general terms one of the few deductions now allowed by the IRS is that associated with real estate interest. The interest you pay on a home equity loan may be tax deductible; however, since every situation is different, you should consult your tax advisor.
There seem to be a lot of restrictions on how and where and when I can use the equity in my property. Who is responsible for this?
Texas has long held onto the concepts of homestead and homestead rights. Texas is the last state to offer to homeowners the right to use the equity in their homes in any fashion. The 1997 Texas legislature wrote the provisions of the "home equity amendment" and is solely responsible for the language and restrictions found there. SACU will follow the law, as we understand it, as we seek to provide service to our members. We will do our very best to help you obtain the home equity loan you wish to have, however we must follow the dictates of the law.
