Home Equity Loans/reFis (rentals, credit, buying a home)

[cgmaetc]

I heard a rumor, and I can't find the answer on the internet so I'm hoping yall Texans can clear this up for me. A friend works for a home lending institution and was trying to dissuade me from buying a home in Texas because...

Texas has a law that prevents homeowners from using ReFi money for anything other than home improvement. Is it true I can't take money out of my own home to buy another property or pay off debt, I have to use it for home upgrades and repairs only?

If you have experience with this, please let me know. Thanks in advance.

[GoPadge]

If it's true, someone needs to let my bank know about it....

A Texans Home Equity Loan allows you to borrow against the equity you have in your primary residence in order to have funds for such expenses as travel, college or a new vehicle. Interest on a Home Equity loan is considerably lower than that of an unsecured loan and interest may be tax deductible*. Choose between a standard Texans Home Equity Loan or a Texans Home Equity Line-of-Credit.

http://www.texanscu.org/Consumer/len...dNavId=&id=115

[TXprincess]

That law was amended a few years ago. Home equity loans are now possible.

[momof2dfw]

Yep, TXprincess is correct. Up until a few years ago Texas did not allow home equity loans. It really was never a big deal however. I've known many people thru the years that have been able to buy additional property be it for rentals or a vacation/weekend spot and to do home improvements w/o the benefits of such loans. The biggest fear for such loans has been the threat of losing ones home if they should be getting these loans to support a lifestyle that puts their families home in jeopardy. When they first became available the banks/lenders hit hard and heavy trying to get people to take out home equity loans. They would really hit people that owed little or nothing on their homes. Of course for the lender these loans are great as if they borrower did default they would make out like a rose. For the borrower that did get caught in such circumstances it could be bad for they could lose their home because of a loan that was not even close to the market value of their home. I don't know many that have had to do such loans as most of us here are accostumed to not having them which in the long run is better.