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November 28, 2016 | money-management

Get Started with a HELOC

If you’re considering applying for a home equity line of credit, otherwise known as a HELOC, you probably already know it offers several advantages.

Not only can the form of funding offer relatively low (and likely tax deductible1 - please consult your tax advisor regarding deductibility of interest) interest rates, but the borrower only pays interest on the portions he spends. No administrative fees are charged, and the funds can be used to pay for a number of expenses that could have a positive effect on your quality of life — anything from renovations or college tuition to debt consolidation, new cars or swimming pools.

During the consideration process, you may want to be aware of the following when it comes to HELOCS. Some are specific to Texas.

HELOC Considerations

  • Amplify HELOCs are open to any Amplify member who lives, works, worships or attends school in Travis, Williamson, Hays, Caldwell or Bastrop counties.
  • You may name a co-applicant such as a spouse or other relative on your application, understanding their credit history could affect approval or disapproval.
  • The property listed as collateral on your HELOC application must be located somewhere in Texas. It must serve as your primary homestead for more than 50 percent of the calendar year, and it cannot be owned by a business or trust.
  • The maximum amount you may borrow is limited to the lower of the following: Either half your home’s market value (assuming your combined loan-to-value doesn’t exceed 80 percent due to a first lien) or 80 percent of the market value minus all unpaid mortgages. In some cases, would-be borrowers don’t have enough equity in their home to qualify for a HELOC.
  • You may need a certain minimum credit score to qualify. Amplify must also consider your employment history, income sources, existing debt, loan to value ratio and debt to income ratio. Sample documents you must gather include W2s, tax returns and statements of income from investments, retirement, etc. While each application is evaluated separately, an ideal credit report is free of bankruptcies, foreclosures, repossessions, mortgage delinquencies, negative public records, charge offs or other credit issues. A favorable debt-to-income ratio (your monthly debt payments divided by your monthly gross income) is less than 43 percent after factoring in HELOC payments.
  • For an update on your credit standing, get the free credit report to which you’re entitled annually by calling Equifax at 1-800-685-1111, Experian at 1-888-397-3742 or TransUnion at 1-800-888-4213.
  • In general, you need 20 days to be approved for a HELOC and another 20 days to complete processing. After that, you can expect your funds four days after your closing date. If you need funds faster, consider doing a Homeowner Express Loan as a “bridge” loan while your HELOC is being processed. Homeowner Express Loans are unsecured and thus fund-able within 24 hours of approval.
  • Once you receive HELOC funds you are welcome to withdraw the money in $4,000 increments without fee. Variable interest rates will be charged on the withdrawal amount only. Early payoff can be made without financial penalty.
  • Balances not paid by the end of the agreement may be refinanced into another HELOC or subjected to regular installment payments.

How do you get started?

Click on Get Started below to provide basic information, and an Amplify agent will contact you to learn more about your needs and complete your initial application if you’re ready. You will be asked to sign several documents and provide several more confirming your income and debt history. If all goes well, your closing will then be scheduled at an Amplify office, title company office or attorney’s office at a time convenient to you.

Ready to start the process?

Get Started

1. Home Equity: APR is Annual Percentage Rate. Loans Subject to approval. Combined Loan-to-Value (CLTV) cannot exceed 80% of your home’s value. Additional terms, conditions, and restrictions may apply. Amplify Membership and Property Insurance required.

HELOC: The home equity line of credit Annual Percentage Rate (APR) is variable and is based on the highest Prime Rate published each month-end in The Wall Street Journal Money Rates Table (the "Index"), plus a margin. The current Index is 3.50%. Maximum APR is 17.90%. This Account has a Draw Period of 10 years, after which you will be required to repay any amounts within a 10-year term. Interest on your HELOC may be tax-deductible – please consult your tax advisor for details. Property Insurance, including flood insurance as needed, is required. Loans Subject to approval. Additional terms, conditions, and restrictions may apply. Amplify Membership required. Consult the CFPB's Home Equity Line of Credit booklet as well as the Early HELOC Disclosure for more information.

Under Texas law, the maximum you can borrow with a HELOC is 50% of the fair market value of your home, as long as the combined loan-to-value does not exceed 80% in cases where there is an existing first lien mortgage on the home. A minimum draw amount of $4000 is required for each advance after the initial $10,000 advance at origination.