HELOC

One-line summary: A revolving line of credit secured by your home’s equity, borrow what you need, when you need it, and pay back on flexible terms, all without disturbing your existing first mortgage.

Best for

Homeowners who want access to equity for ongoing or uncertain expenses, home improvements, education, debt consolidation, business capital, or as a financial safety net, without refinancing their current first mortgage (especially valuable when the existing mortgage rate is below current rates).

Key terms (typical)

Attribute	Typical Range
Eligible properties	Primary residences (homesteads) only. Texas constitutional guidelines strictly prohibit open-end equity lines or cash-out products on non-owner occupied assets, second homes, or investment real estate.
Loan type	Second lien revolving line of credit
Combined LTV	Strictly capped at a maximum of 80% Combined LTV per Texas Section 50(a)(6) constitutional law. All existing first liens plus the proposed HELOC draw capacity combined cannot exceed this 80% line.
Draw period	5–10 years (interest-only payments on amount drawn)
Repayment period	10–20 years (principal + interest) after draw period ends
Rate type	Variable, tied to prime rate plus a margin
Credit score	680+ typical; 720+ for best terms
Closing costs	Lower than refinancing; some programs no-cost

Why borrowers choose this program

• Pay interest only on what you draw. Unlike a cash-out refinance that lends the full amount at closing, a HELOC charges interest only on funds actually used.
• Preserves your existing first mortgage. If you have a low-rate first mortgage from a prior year, a HELOC lets you access equity without disturbing that rate.
• Flexible access. Once approved, you can draw and repay multiple times during the draw period, like a credit card secured by your home.
• Lower upfront costs. HELOC closings are typically faster and cheaper than refinances.

Considerations

• Variable rate. Most HELOCs are variable-rate, tied to prime. Your payment can rise if rates rise.
• Payment shock at repayment phase. When the draw period ends, the loan converts to fully amortizing, monthly payments can jump significantly.
• Secured by your home. A HELOC is a second mortgage on your home. Default puts the property at risk just like a first mortgage default.
• Reduced equity cushion. Drawing the line reduces your equity position. If home values fall, you could find yourself with little or negative equity.