We were the last State to be able
to do these loans. For 150 years, Texas has banned home equity loans. On
November 4, 1997, the voters of Texas overturned this ban on home equity loans
by approving a Constitutional Amendment to the Texas Constitution.
Beginning January 1, 1998,
home equity loans were permitted in Texas. Texas is the
second-most-populous state and Texans have more than $200 billion of equity in
their homes. Other than banks, savings and loans, savings banks, credit unions
and under certain circumstances HUD approved lenders, home equity loans may only
be made by mortgage companies licensed in Texas with a Texas Regulated Lending
License.
For more than 160 years, access to the home equity that owners had built up in their residences was largely untapped. As a direct result of the Panic of 1837, Texas prohibited the forced sale of homesteads for all but a very limited number of reasons. When Texas became a state, these protections became part of the state constitution and effectively barred foreclosing on a person’s residence for reasons other than non-payment of taxes, the original mortgage or a home improvement loan. These same provisions also effectively barred tapping into home equity for purposes other than home improvement.
But on November 4, 1997, Texas voters approved a constitutional amendment allowing more leeway in home equity lending and for reverse mortgages. These loans became available to Texans in 1998, but some technical issues limited the availability of home equity loans for homesteads larger than one acre and from reverse mortgages. Subsequent amendments addressed these legal concerns.
Changes in the Texas Constitution expanded the conditions under which homeowners could obtain a traditional home equity loan. These closed-end loans extend for a specified length of time and generally require repayment of interest and principal in equal monthly installments. Interest rates on these loans are ordinarily fixed for the life of the loan.
Lone Star Funding Partners, LLC
281 852-7836
Humble, TX 77346