Texas HELOC State Law

[Kim G.]

Hi everyone! I am new to this site. I have watched several videos and read articles about using a HELOC to pay down your mortgage. These resources also mention that it only works if you use your HELOC like a Checking Account. I get what they are saying. I have spent all week calling local banks, state banks, and national banks and finally realized they were all saying the same thing - you can't use a HELOC in Texas as a checking account. There is a minimum draw of $4,000 and no debit card. It's a Texas Law! You have to write yourself a check into a different checking account. Now, I know I could keep a big spreadsheet and pay any extra into my monthly payment back into the HELOC. But that makes it more difficult!

Does anyone here have experience using a HELOC in Texas to payoff a mortgage? How did you handle this situation?

My situation: My primary residence is in Texas (15 yr mortgage @3.25%, 4 years into it) and is the home I have been researching all week to get a HELOC. I am leaning toward Amplify based out of Austin. I have an investment property in South Carolina (30 yr mortgage @4.75%, 7 years into it) that currently has renters. I also need to payoff that mortgage and PMI. My original plan was to get a HELOC on the Texas home, payoff $13k debt, $11k towards second mortgage to get rid of the PMI. Dump the remaining money into the Primary Mortgage and start paying down the HELOC, rinse and repeat. Once the primary mortgage was taken care of, I was going to move on to the secondary mortgage. Then, start looking into other rental properties.

I have not yet looked into getting a HELOC on the secondary mortgage. I know the LTV% is less and I assume the rate is higher. I plan to do that next as a possible option.

I know there is pending legislation that will be set to vote on 11/07/17 for Prop 2 SJR 60. It doesn't really sound like it has anything to do with my problem.

Any advice would be greatly appreciated! 

[Kim G.]

We went with Amplify in Austin. 80% of appraised value, all done over the phone, appraisal done via online comps. Min $10k draw, which we immediately turned around and transferred back to HELOC. $300 application fee only. No other charges. I called 15 banks and this was the best deal we could find. Oh, and their APR was lower than the market rate!