Your home is more than just a place to live; it can also be a smart financial tool. If you’ve built up equity in your home, you might be able to tap into that value to help pay for important goals, big expenses, or even reduce high-interest debt. But how exactly does that work?
Let’s break it down.
What Is Home Equity?
Home equity is the difference between your home’s current market value and the balance you still owe on your mortgage. If your home is worth $300,000 and you owe $200,000, you’ve built $100,000 in equity. That equity grows over time as you pay down your mortgage or as your home’s value increases.
In Texas, you can borrow up to 80% of your home’s appraised value, minus what you still owe on your mortgage. So, if your home is worth $300,000, 80% of that is $240,000. If you still owe $200,000 on your mortgage, you may be able to borrow up to $40,000 through a home equity loan.
What Does a Home Equity Loan Do?
A home equity loan lets you borrow against that built-up value. Think of it as a second mortgage, one that gives you a lump sum of cash up front, which you pay back over time with a fixed interest rate. That predictability makes it a great option for:
- Home renovations or repairs
- Consolidating high-interest debt
- Covering tuition or education costs
- Funding a major purchase
- Emergency expenses
You can also explore cash-out refinancing, which replaces your mortgage with a larger one and gives you the difference in cash.
How Do I Get a Home Equity Loan?
The process is easier than you might think, especially when you work with a credit union that puts members first. Here’s how to get started:
- Figure out how much equity you have – Use a recent appraisal or market estimate and subtract your mortgage balance. In Texas, the formula to estimate your borrowing limit is:
(Home Value × .80) – Mortgage Balance
For example, if your home is valued at $300,000 and you owe $200,000, you could potentially borrow up to $40,000. - Check your credit and income – Lenders will look at your credit score, income, and debt-to-income ratio to determine eligibility.
- Choose the right product – Our lending team can help you compare fixed-rate home equity loan options tailored to your needs.
- Apply with confidence – You can quickly and easily apply online, and we’ll walk you through the paperwork, rates, terms, and next steps.
Why Work with a Credit Union Like ATFCU?
Unlike big banks, we focus on helping our members succeed, not maximizing profits. That means lower rates, fewer fees, and personalized service every step of the way. Whether you're upgrading your kitchen or refinancing high-interest debt, we’ll help you use your home’s equity wisely and affordably.
Ready to get started?
Your home has value, let’s put it to work for your future.