Mar 163 min
(Both the video and article offer distinct perspectives and information. Be sure to check out both for a comprehensive understanding. The video provides visual clarity, while the article delves into specific details. Together, they provide valuable insights to help you navigate your situation effectively).
Navigating the complexities of divorce often involves uncovering hidden financial entanglements, such as home equity lines of credit (HELOCs). It's common for homeowners to overlook these open lines of credit, especially when there's no outstanding balance.
To ensure clarity regarding your property's financial history, ordering a title commitment from a reputable title company is crucial. Additionally, pulling a credit report can reveal any overlooked open lines of credit associated with the property.
Even if a HELOC has been paid off, it remains open until formally closed. Failure to close it can result in both parties of the divorce remaining liable for any future balances, as each retains the ability to utilize it.
Closing a HELOC requires a formal request letter from the borrower(s); it cannot be done by a title company on your behalf. This demand letter must be initiated by both of the parties involved in the divorce proceedings to ensure the closure of the line of credit, thus relieving both parties of any further liability.
It's essential to understand that any demand letter to freeze an open line of credit must be jointly signed by both parties involved in the divorce proceedings. If one party refuses to sign, legal recourse may be necessary, potentially requiring a court order from a judge. Overlooking this step can lead to a lien being placed against the property if the HELOC is utilized in the future.
Furthermore, even if one party retains ownership of the home and the HELOC remains open, both parties still bear liability, as either can access funds. In the worst-case scenario of non-payment, the bank retains the right to foreclose on the property. To avoid these complications, obtaining a title commitment and reviewing credit reports are simple steps that can prevent issues down the line.
Here's what you need to know about closing a HELOC in Texas:
Location: Texas law requires HELOC closings to happen at the physical office of the lender, an attorney, or a title company.
Borrower attendance: You, the borrower, must be present at closing in person. A power of attorney cannot be used for this purpose.
Timeline: There's a mandatory waiting period in Texas. You can't close on your HELOC until at least one business day after you receive the final closing disclosure.
Here are some additional steps involved in closing a HELOC in Texas:
Final paperwork review: Carefully review all the loan documents before signing anything at closing.
Closing costs: Be prepared to pay closing costs, which can include appraisal fees, title fees, and lender fees.
It's recommended to speak to your lender about the specific steps involved in closing your HELOC. They can provide you with a detailed closing disclosure and answer any questions you may have.
Seeking guidance from a qualified attorney is advisable to navigate the specific requirements of your situation. Transparency from the outset can save you from headaches and anxiety later on. If you need a recommendation for an attorney, I'm happy to assist. Don't hesitate to reach out when you're ready to discuss selling your home further!