A reverse mortgage (RM) is a a method for helping
house-rich, cash-poor unlock their equity and convert
it into income without having to sell their homes.
Unlike an equity loan,
which requires a borrower to make monthly payments,
a reverse mortgage borrower receives payments from
Because borrowers do not make monthly payments, they cannot
default on a RM. Foreclosures are impossible by definition,
they are strictly prohibited.
is a home equity loan?
A home equity loan is a financial product that
allows a borrower to use the market value of a
home as collateral for a loan. Loans secured by
real estate generally are considered safer by
lenders, resulting in lower interest rates than
for other types of loans.
is easily calculated by subtracting the amount
owed on the home from the current market value.
For example, if a house with a market value of
$100,000 has an outstanding mortgage of $30,000,
the homeowner has equity of $70,000. If there were
no mortgage or other type of lien on the house,
the homeowner would have $100,000 in equity.
much can I borrow?
Through home equity loans, Texans can borrow money
using up to 80% of the value of their homes as
collateral. Consider the example of a home valued
at $100,000 with an outstanding mortgage debt of
$30,000 and $70,000 worth of equity. Because
homeowners are limited to borrowing no more than
80% of the home's value, the homeowner would
simply calculate 80% of $100,000 ($80,000) and
then subtract $30,000 to arrive at a maximum loan
amount of $50,000.
mortgage debt, including the amount of any
existing mortgages plus the projected home equity
lien, cannot exceed 80% of the home's current fair
with 20% or less equity in their homes are not
eligible for home equity loans.
can't I borrow against more than 80% of the home's
Texans voted to limit the loan amount to 80% to
help prevent overextensions of credit and protect
our economy during times of economic slowdown.
are home equity loan interest rates determined?
Market competition and conditions determine the
rates in general; the borrower's own credit
history will further affect the rate offered. Home
equity loans usually have lower interest rates
than do other types of consumer loans, such as
loans secured by personal property or loans
secured simply by a borrower's signature
(unsecured loans). First mortgages (the primary
loan on a house) generally have the lowest
interest rates. As with any financial arrangement,
you should shop around to find the best deal. In
Assistance section of our Web site are links
to some handy online calculators that will help
you compare loan programs.
other costs are involved?
Lenders can charge certain fees, usually called
closing costs, in addition to interest. On a home
equity loan, closing costs cannot exceed three
percent (3%) of the principal amount borrowed.
Prepaid interest, also known as points, is not
subject to the 3% cap.
if I feel a lender has overcharged me on closing
As a savvy consumer, you should always carefully
examine a loan agreement before signing it. Have
the lender thoroughly explain the contract's fee
structure; you'll discover that any points you've
purchased are not considered part of the fee
amount subject to the three percent limitation.
a lender has overcharged you, you must give the
lender a chance to correct the mistake (called
curing the loan) before you can take legal action
against them. You need to send a written request
to the lender specifying the error so that the
lender can issue a corrected loan agreement and
refund any amounts due.
there different kinds of home equity loans?
No, but a home equity loan can hold either first
lien or junior lien (often called second)
If you own your home outright and take out a home
equity loan, it will be considered a first
mortgage because it is first in line to receive
payment if the home is sold or a borrower
defaults. If you refinance an existing first
mortgage, and pledge some of your equity to
receive cash in hand, you will still have just
one-but larger-first mortgage. In this loan,
generally called a cash out re-fi, the dollar
difference between the original mortgage and the
refinanced mortgage is the home equity loan
secondary mortgage is a loan secured by a house
that already has at least one other mortgage or
lien. Taking out a home equity loan in addition to
a first mortgage places a second lien against the
home. The law prohibits a homeowner from having
more than one home equity loan at a time, although
a homeowner may have secondary liens from other
sources, such as a home improvement loan or a tax
I set up a line of credit with my home equity?
As of September 2003, Texans can establish lines
of credit using up to 50% of the value of their
homes as collateral (as opposed to the 80% allowed
on standard loans).
can I use the money?
However you choose. There are no legal
restrictions regarding how you use your loan
if I change my mind?
The law requires a 12-day waiting period from the
time an application is taken AND a legally
mandated written consumer rights notice is given
to the borrower. For example, if a potential
borrower submits an application on Monday, but
doesn't receive a copy of the consumer rights
notice until Wednesday, then the 12-day countdown
would begin on Wednesday. The 12-day period is
measured in calendar days (rather than business
days) per the Home
Equity Commentary issued by this office. Once
the waiting period has passed, the loan can be
closed. Further, the homeowner or homeowner's
spouse may still cancel the loan agreement without
penalty within three days after closing.
many home equity loans can I have?
A borrower may have only one equity loan at a
time. Furthermore, it cannot be refinanced more
frequently than once a year. Because of this
limitation, it is crucial to shop for the best
terms among lenders. It is also important, as in
any credit transaction, to compare the total costs
of a home equity loan to other types of credit
available to the consumer. For example, a borrower
might not face a prepayment penalty for early
payoff of a home equity loan. However, if the loan
is paid off early, a home equity loan could end up
being more expensive than an unsecured loan with a
higher interest rate if you paid closing costs and
points. To better determine the best solution to
your situation, see the financial calculators in
the Consumer Assistance section of our Web site
for help crunching the numbers.
do I have to wait a year to refinance a home
Texas voters placed this provision in the Texas
Constitution as a consumer protection. Because
closing costs and points are collected each time a
mortgage loan is closed, generally it's not a good
idea to refinance often.
a lender foreclose on my home if I'm late paying
on a car loan or a credit card?
On a standard car loan, the car itself is the
collateral, and Texas law prohibits using a
person's homestead as additional collateral on the
same loan. However, if a homeowner decides to take
out a home equity loan to pay off credit card
debts or buy a car, the home is then collateral
for the home equity loan and can be foreclosed on
if the homeowner does not make payments on time.
else should I know?
It's always a sound practice to shop around for a
loan, but don't fill out any applications until
you've picked the company you definitely want to
work with. Filling out too many applications may
unduly harm your credit report.
you sign on the dotted line, find out what kind of
experience other consumers have had with your
potential lenders. Check out lenders with the Better
Office of Consumer Credit Commissioner regulates
certain home equity lenders and offers a Consumer
Helpline for credit-related questions at
800.538.1579. We can let you know about consumer
complaints we have on file. To get more
information about home equity issues or to request
lender complaint files, visit our Consumer
Fact Sheet on Reverse Mortgages
Until recently, there
were two main ways to get cash from your home:
could sell your home, but then you would have
to move; or|
could borrow against your home, but then you
would have to make monthly loan repayments.|
Now reverse mortgages
give you a third way of getting money from your
home. And you don't have to leave your home or
make regular loan repayments.
A reverse mortgage is a
loan against your home that you do not have to pay
back for as long as you live there. It can be paid
to you all at once, as a regular monthly advance,
or at times and in amounts that you choose. You
pay the money back plus interest when you die,
sell your home, or permanently move out of your
All owners of the home
must apply for the reverse mortgage and sign the
loan papers. All borrowers must be at least 62
years of age for most reverse mortgages. Owners
generally must occupy the home as a principal
residence (where they live the majority of the
Single family one-unit
dwellings are eligible properties for all reverse
mortgages. Some programs also accept 2-4 unit
owner-occupied dwellings, along with some
condominiums, planned unit developments, and
manufactured homes. Mobile homes and cooperatives
are generally not eligible.
Reverse mortgage loans
typically require no repayment for as long as you
live in your home. But they must be repaid in
full, including all interest and other charges,
when the last living borrower dies, sells the
home, or permanently moves away.
Because you make no
monthly payments, the amount you owe grows larger
over time. As your debt grows larger, the amount
of cash you would have left after selling and
paying off the loan (your "equity")
generally grows smaller. But you can never owe
more than your home's value at the time the loan
borrowers continue to own their homes. So you are
still responsible for property taxes, insurance,
and repairs. If you fail to carry out these
responsibilities, your loan could become due and
payable in full.
These loans can be paid
to you all at once in a single lump sum of cash,
as a regular monthly loan advance or as a credit
line that lets you decide how much cash to
use and when to use it. Or you may choose any
combination of these payment plans.
Some reverse mortgages
are offered by state and local governments. These
"public sector" loans generally must be
used for specific purposes, such as paying for
home repairs or property taxes. Other reverse
mortgages are offered by banks, mortgage
companies, and savings associations. These
"private sector" loans can be used for
The amount of cash you
can get from a private sector reverse mortgage
generally depends on your age, your home's value
and location, and the cost of the loan. The
greatest cash amounts typically go to the oldest
borrowers living in the most expensive homes on
loans with the lowest costs.
The amount of cash you
can get also depends on the specific reverse
mortgage plan or program you select. The
differences in available loan amounts can vary
greatly from one plan to another. Most homeowners
get the largest cash advances from the federally
insured Home Equity Conversion Mortgage (HECM).
HECM loans often provide much greater loan
advances than other reverse mortgages.
The lowest cost reverse
mortgages are offered by state and local
governments. They generally have low or no loan
fees, and the interest rates are typically low or
moderate as well. Private sector reverse mortgages
include a variety of costs. An application fee
usually includes the cost of an appraisal and a
credit report. Other loan costs typically include
an origination fee, closing costs, insurance, and
a monthly servicing fee. These costs generally can
be paid with loan advances, which mean they are
added to your loan balance (the amount you owe).
Interest is charged on all loan advances.
Reverse mortgages are
most expensive in the early years of the loan, and
then become less costly over time. The cost can be
very high in the short term, and is least costly
if you live longer than your life expectancy. The
federally insured Home Equity Conversion Mortgage
(HECM) is almost always the least expensive
private sector reverse mortgage.
Consumers considering a
private sector reverse mortgage other than a HECM
should carefully consider how much more it is
likely to cost before applying. Other articles in
The Basics section of this web site's Reverse
Mortgages information provide more details on
measuring and comparing the total cost of these
Estates, and Public Benefits
Reverse mortgages may
have tax consequences, affect eligibility for
assistance under Federal and State programs, and
have an impact on the estate and heirs of the
An American Bar
Association guide states that generally "the
IRS does not consider loan advances to be
income." The guide explains that if you
receive SSI, Medicaid, or other public benefits
loan advances are counted as "liquid
assets" if you keep them in an account past
the end of the calendar month in which you receive
them. If you do, you could lose your eligibility
for these programs if your total liquid assets
(for example, money you have in savings and
checking accounts) are greater than these programs
Although there are
different types of reverse mortgages, all of them
are similar in certain ways. Here are the features
that most have in common.
With a reverse mortgage,
you remain the owner of your home just like when
you had a forward mortgage. You are still
responsible for paying your property taxes and
home-owner insurance and for making property
When the loan is over,
you or your heirs must repay all of your cash
advances plus interest. Reputable lenders don't
want your house; they want repayment.
You can use the money you
get from a reverse mortgage to pay the various
fees that are charged on the loan. This is called
"financing" the loan costs. The costs
are added to your loan balance, and you pay them
back plus interest when the loan is over.
The amount of money you
can get depends most on the specific reverse
mortgage plan or program you select. It also
depends on the kind of cash advances you choose.
Some reverse mortgages cost a lot more than
others, and this reduces the amount of cash you
can get from them.
Within each loan program,
the amounts you can get generally depend on your
age and your home's value:
older you are, the more cash you can get; and|
your home is worth, the more cash you can get.|
The specific dollar
amount available to you may also depend on
interest rates and closing costs on home loans in
generally must be "first" mortgages,
that is, they must be the primary debt against
your home. So if you now owe any money on your
property, you generally must either :
the old debt before you get a reverse
the old debt with the money you get from a
Most reverse mortgage
borrowers pay off any home debt with a lump sum
advance from their reverse mortgage. You may not
have to pay off other debt against your home if
the prior lender agrees to be repaid after the
reverse mortgage is repaid. Generally only state
or local government lending agencies are willing
to consider "subordinating" their loans
in this way.
The debt you owe on a
reverse mortgage equals all the loan advances you
receive (including any you used to finance the
loan or to pay off prior debt), plus all the
interest that is added to your loan balance. If
that amount is less than your home is worth when
you pay back the loan, then you (or your estate)
keep whatever amount is left over.
But if your rising loan
balance ever grows to equal the value of your
home, then your total debt is limited by the value
of your home. Put another way, you can never owe
more than what your home is worth at the time the
loan is repaid. The lender may not seek repayment
from your income, your other assets, or from your
(The technical term for
this cap on your debt is a "non-recourse
limit." It means that the lender does not
have legal recourse to anything other than your
home's value when seeking repayment of the loan.)
All reverse mortgages are
due and payable when the last surviving borrower
dies, sells the home, or permanently moves out of
the home. (Typically, a "permanent move"
means that neither you nor any other co-borrower
has lived in your home for one continuous year.)
Reverse mortgage lenders
can also require repayment at any time if you:
pay your property taxes;|
maintain and repair your home; or|
keep your home insured.|
These are fairly standard
"conditions of default" on any mortgage.
On a reverse mortgage, however, lenders generally
have the option to pay for these expenses by
reducing your loan advances and using the
difference to pay these obligations. This is only
an option, however, if you have not already used
up all your available loan funds.
Other default conditions
on most home loans, including reverse mortgages,
declaration of bankruptcy;|
donation or abandonment of your home;|
perpetration of fraud or misrepresentation;|
government agency needs your property for
public use (for example, to build a highway);
government agency condemns your property (for
example, for health or safety reasons).|
Changes that could affect
the security of the loan for the lender can also
make reverse mortgages payable. For example:
out part or all of your home;|
new owner to your home's title;|
your home's zoning classification; or|
out new debt against your home.|
You must read the loan
documents carefully to make certain you understand
all the conditions that can cause your loan to
After closing a reverse
mortgage, you have three days to reconsider your
decision. If for any reason you decide you do not
want the loan, you can cancel it. But you must do
this within three business days after closing.
"Business days" include Saturdays, but
not Sundays or legal public holidays.
If you decide to cancel,
you must do it in writing, using the form provided
by the lender, or by letter, fax, or telegram. It
must be hand delivered, mailed, faxed, or filed
with a telegraph company before midnight of the
third business day. You cannot cancel by telephone
or in person. It must be written.
stands for home equity line of credit, or simply
"home equity line." It is a loan set up
as a line of credit for some maximum draw, rather
than for a fixed dollar amount.
example, using a standard mortgage you might
borrow $150,000, which would be paid out in its
entirety at closing. Using a HELOC instead, you
receive the lenderís promise to advance you up
to $150,000, in an amount and at a time of
your choosing. You can draw on the line by writing
a check, using a special credit card, or in other
are convenient for funding intermittent needs,
such as paying off credit cards, making home
improvements, or paying college tuition. You draw
and pay interest on only what you need.
costs are also relatively low. On a $150,000
standard loan, settlement costs may range from $
2-5,000, unless the borrower pays an interest rate
high enough for the lender to pay some or all of
it. On a $150,000 HELOC, costs seldom exceed
$1,000 and in many cases are paid by the lender
without a rate adjustment.
HELOCs are second mortgages. An increasing number,
however, are first mortgages, as yours would be if
you used it to refinance your existing first
mortgage. Using a HELOC as a substitute for a
first mortgage is risky, for reasons discussed in
the balance of a HELOC may change from day to day,
depending on draws and repayments, interest on a
HELOC is calculated daily rather than monthly. For
example, on a standard 6% mortgage, interest for
the month is .06 divided by 12 or .005, multiplied
by the loan balance at the end of the preceding
month. If the balance is $100,000, the interest
payment is $500.
a 6% HELOC, interest for a day is.06 divided by
365 or .000164, which is multiplied by the average
daily balance during the month. If this is
$100,000, the daily interest is $16.44, and over a
30-day month interest amounts to $493.15; over a
31 day month, it is $509.59.
have a draw period, during which the borrower can
use the line, and a repayment period during which
it must be repaid. Draw periods are usually 5 to
10 years, during which the borrower is only
required to pay interest. Repayment periods are
usually 10 to 20 years, during which the borrower
must make payments to principal equal to the
balance at the end of the draw period divided by
the number of months in the repayment period. Some
HELOCs, however, require that the entire balance
be repaid at the end of the draw period, so the
borrower must refinance at that point.
major disadvantage of the HELOC is its exposure to
interest rate risk. All HELOCs are adjustable rate
mortgages (ARMs), but they are much riskier than
standard ARMs. Changes in the market impact a
HELOC very quickly. If the prime rate changes on
April 30, the HELOC rate will change effective May
1. An exception is HELOCs that have a guaranteed
introductory rate, but these hold for only a few
months. Standard ARMs, in contrast, are available
with initial fixed-rate periods as long as 10
Some HELOCs are convertible into fixed-rate loans
at the time of a drawing. This is a useful option
for borrowers who draw a large amount at one time.
rates are tied to the prime rate, which some argue
is more stable than the indexes used by standard
ARMs. In 2003, this certainly seemed to be the
case, since the prime rate changed only once, to
4% on June 27. However, as recently as 2001, the
prime rate changed 11 times and ranged between
4.75% and 9%. In 1980, it changed 38 times and
ranged between 11.25% and 20%.
addition, most standard ARMs have rate adjustment
caps, which limit the size of any rate change. And
they have maximum rates 5-6% above the initial
rates, which puts them roughly at 8% to 11%.
HELOCs have no adjustment caps, and the maximum
rate is 18% except in North Carolina, where it is
compare the APR on a HELOC with the APR on a
standard loan because they mean different things.
The APR on a HELOC is the interest rate, period.
Among other things, it does not reflect points or
other upfront costs, as the APR on standard loans
does. Requiring lenders to show the interest rate
on a HELOC twice is a strange way to protect
borrowers, but there it is.
shopping for a HELOC is very different from
shopping for a standard mortgage. In most
respects, it is simpler, if you know what you are
HELOC is a line of credit, as opposed to a loan
for a specified sum, and it is always adjustable
rate. The bad news about that, which I discuss in What
Is a HELOC, is that HELOCs provide
borrowers with much less protection against
interest rate increases than standard ARMs.
good news is that HELOCs are easier to shop for.
The major reason is that important features are
the same from one lender to another.
interest rate on all the HELOCs is tied to the
prime rate, as reported in the Wall Street
Journal. In contrast, standard ARMs use a number
of different indexes (LIBOR, COFI, CODI, and so
on) which careful shoppers have to evaluate.
interest rate on the HELOCs adjust the first day
of the month following a change in the prime rate,
which could be just a few days. (Exceptions are
those HELOCs with an introductory guaranteed rate,
but these hold only for 1 to 6 months). Standard
ARMs, in contrast, fix the rate at the beginning
for periods ranging from a month to 10 years.
HELOCs have no limit on the size of a rate
adjustment, and most of them have a maximum rate
of 18% except in North Carolina, where it is 16%.
Standard ARMs may have different rate adjustment
caps and different maximum rates.
critical feature of a HELOC that is not the
same from one lender to another, and which should
be the major focus of smart shoppers, is the margin.
This is the amount that is added to the prime rate
to determine the HELOC rate. Many if not most
lenders do not volunteer the margin unless they
is what can happen when you donít ask. Borrower
X, who provided me with his history, was offered
an introductory rate of 4.5% for 3 months. He was
told that after the three months the rate
"would be based on the prime rate." At
the time the loan closed, the prime rate was 4%.
Three months later, the prime rate was still 4%,
but the rate on his loan was raised to 9.5%. It
turned out that the margin, which the borrower
never asked about, was 5.5%!
Do not assume that the difference between your
HELOC start rate and the prime rate is the margin.
It may or may not be. Ask. Bear in mind, as well,
that the margin varies with credit score, ratio of
total mortgage debt to property value,
documentation and other factors. You need the
margin on your deal, not the margin they
are advertising which is their best deal.
in Lending (TIL) on a HELOC is a travesty. It
requires that borrowers be given an APR, which is
the same as the interest rate. The borrower
described above was given an APR of 4.5% early on,
and when his rate jumped to 9.5% he was told that
his new APR was 9.5%. TIL does not require
disclosure of the margin.
the HELOC will be used to meet future
contingencies rather than to refinance an existing
mortgage, the shopper needs to know whether there
is a minimum draw at closing, or a minimum average
loan balance. Lenders donít make any money
unless the HELOC is used, but they are not always
forthcoming about this. Borrowers who are
uncertain about future usage donít want to be
forced to borrow money they wonít need.
and least important are the fees. Upfront fees are
the same types as on standard mortgages, except
that HELOC lenders seldom charge points, and third
party fees tend to be small and are often paid by
the lender. In addition, there are some uniquely
HELOC charges that you should factor in. These
include an annual fee, usually $25-$75 and often
waived the first year; and a cancellation fee,
perhaps $350-$500, which is usually waived if the
account stays open for 3 years.
is your checklist: make sure the figures you get
apply to your deal.
Introductory rate and period
Required average balance
Upfront lender fees
Upfront third party fees
Short History of Texas
Home Equity loans.
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. Many home equity
lenders are aggressively entering the Texas home equity
loan market. 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. Since Texas is
the last state in the Union to offer home equity loans,
the potential growth for the second mortgage business is
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
personís 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
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
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.
Home Equity Lending in Texas
changing the Texas constitution to allow wider use of
home equity loans, Texans have steadily increased their
reliance on these loans. According to American Housing
Survey (AHS) data on nine Texas metropolitan areas that
cover 68 percent of Texasí owner-occupied homes, only
2.5 percent of Texas homeowners had any form of home
equity loan in 1997, substantially less than the 14.5
percent for all U.S. homeowners outside of Texas that
the proportion of Texas homeowners with a home equity
loan had risen to 4.5 percent. While this represents
nearly a doubling of home equity loan usage in just two
years, this was still slightly less than the estimated 5
percent rate for home equity loan usage in the nation
and substantially less than the 12.9 percent estimated
by the AHS that year for both home equity loans and
lines of credit.
the proportion of Texas households with home equity
loans had reached 6.4 percent. At this level, the usage
in Texas actually exceeded the usage rate of fixed-term
closed-end loans in the U.S., indicating that Texans may
have reached the saturation point with traditional home
equity loans. These loans typically are written for a
set amount to be repaid in equal installments over a
specified time, just like a traditional mortgage.
Based on a
survey conducted for the Comptroller of Public Accounts
of home equity lenders in Texas, from 1998 to 2000,
the amount of the average home equity loan was about
$36,750. In 2001 and 2002, the average home equity loan
jumped to more than $47,000.
Texansí reliance on home equity loans has grown
substantially since the passage of the constitutional
amendment, further gains may be unlikely. Other
statesí average usage of 14 percent in 2001 included
both traditional home equity loans and home equity lines
of credit, financial instruments not now available to
Texas homeowners. The possibility that the usage rate of
traditional home equity loans in Texas exceeded the
usage rate of similar loans in the nation probably
indicates that without the home equity line of credit
option, more homeowners are opting for the fixed term
loansótheir only other choice.
much of the 1990s, about 8 percent of U.S. homeowners
had a home equity line of credit whereas about 5 percent
of homeowners had a traditional loan.
In 2001, AHS data indicated an estimated 8.4 percent of
homeowners had a home equity line of credit (HELOC) and
5.7 percent had traditional home equity loans.
form of home equity lending has become the preferred
choice by homeowners in other states. A HELOC is a
revolving account that permits borrowing from time to
time, at the account holderís discretion, up to a set
credit limit. HELOCs also typically have more flexible
repayment schedules than traditional home equity loans
and have a variable interest rate.
consumers think home equity lines of credit are more
convenient than traditional home equity loans. While
about 40 percent of consumers cited the tax advantages
of both types of home equity credit as an important
consideration, 43 percent of HELOC users cited
convenience of use as an advantage, compared with only 1
percent of those using the traditional home equity
the major lenders in Texas make HELOC loans to
homeowners in other states. Their experiences underscore
how attractive this option is to consumers. Figure 2
presents the percentage of the amount of home equity
loans and lines of credit written in Georgia, Florida
and California by three major Texas lenders.
About 88 percent of the consumers in these states choose
HELOCs compared with about 12 percent choosing
traditional home equity loans.
Peterson IS LICENSED UNDER THE LAWS OF THE STATE OF
TEXAS AND BY STATE LAW IS SUBJECT TO REGULATORY
OVERSIGHT BY THE TEXAS SAVINGS AND LOAN DEPARTMENT. ANY
CONSUMER WISHING TO FILE A COMPLAINT AGAINST Daniel
Peterson SHOULD COMPLETE, SIGN, AND SEND A COMPLAINT
FORM TO THE TEXAS SAVINGS AND LOAN DEPARTMENT, 2601
NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT
FORMS AND INSTRUCTIONS MAY BE DOWNLOADED AND PRINTED
FROM THE DEPARTMENTíS WEB SITE LOCATED AT
WWW.TSLD.STATE.TX.US OR OBTAINED FROM THE DEPARTMENT
UPON REQUEST BY MAIL AT THE ADDRESS ABOVE, BY TELEPHONE
AT ITS TOLL-FREE CONSUMER HOTLINE AT 1-877-276-5550, BY
FAX AT (512) 475-1360, OR BY E-MAIL AT TSLD@TSLD.STATE.TX.US.
THE DEPARTMENT MAINTAINS THE MORTGAGE BROKER RECOVERY
FUND TO MAKE PAYMENTS OF CERTAIN TYPES OF JUDGMENTS
AGAINST A MORTGAGE BROKER OR LOAN OFFICER. NOT ALL
CLAIMS ARE COMPENSABLE AND A COURT MUST ORDER THE
PAYMENT OF A CLAIM FROM THE RECOVERY FUND BEFORE THE
DEPARTMENT MAY PAY A CLAIM. FOR MORE INFORMATION ABOUT
THE RECOVERY FUND, PLEASE CONSULT SUBCHAPTER F OF THE
MORTGAGE BROKER LICENSE ACT ON THE DEPARTMENTíS WEB
SITE REFERENCED ABOVE.
decide how much to send each month with 4 pay
options . Pick-A-Paysm
are protected service marks of Golden West