About Home Equity Loan Rates in Texas

During a tough economy, you'll want to look into loan options that offer fair rates and reasonable payment plans. If you live in Texas, you can look into different rates for home-equity loans, which use your equity in your home as collateral, offered by financial institutions in your state.

Function

Home-equity loans are typically offered at a fixed rate, and the recipient is given a set monthly payment to make. You are not restricted in the way you choose to use the money.

Types

Home-equity rates in Texas are determined by a number of things. Market conditions as well as the person's credit history will factor into the rate given. Home-equity loans will usually carry lower interest rates than car loans and personal loans. Currently, home-equity loan rates in Texas fall between 5.99 percent and 10 percent, with a minimum term of 180 months. These rates fall in line with the national average of 7.8 percent.

Features

In Texas, homeowners are permitted to borrow up to 80 percent of the value of their home. If you have less than 20 percent equity in your home, you will not be approved for a home-equity loan. If your house is valued at $200,000 and you owe $60,000, you would be able to borrow $100,000.

Considerations

When you own a home in Texas, you also have the option of receiving a home-equity line of credit instead of a loan. Lines of credit give you access to funds over a set period of time. However, you will be given a variable rate that can increase over time.

Warning

Besides the interest rate, other costs are associated with securing a home-equity loan in Texas. These include closing costs and prepaid interest required by the financial institution. Currently, closing costs in Texas cannot exceed 3 percent of the amount borrowed. You can refinance at any time in order to receive a lower home-equity rate, but you will be subject once again to closing costs.