What Are the Home Equity Loan Rules in Texas?

Must Read

Brief Lines About Down Payment on Home Mortgage

It has been observed from past three years that, everyone is getting many issues regarding the sluggish economy process...

Debt Consolidation Mortgages, Home Equity Loans and Lines of Credit

If you own a home and have a debt load you can no longer handle, one place to go...

3 Tips to Get a Better Home Refinance Loan

Refinancing the home mortgage can save a lot of money for the borrowers if they can do an extensive...

Student Loans Made Accessible by Obama Administration

Federal student loans are assured by the U.S. Department of Education. Government loans are not based off of the...

Home Refinance Stimulus Package – Mortgage Refinancing and Loan Modification

The Obama administration has signed a home refinance stimulus package that includes $75 billion in funding to help home...

Student Loan Consolidation Rates Fixed Versus Variable

So you've finished college and decided to consolidate your loans into one monthly payment. Great! Consolidation will help you...
Admin
test

The state of Texas has some pretty interesting refinance rules. This is especially true when one wants to pull cash or equity out of their home.There are two types of mortgage refinances. The first type is called a rate and term refinance. This is simply when someone wants to lower their rate or change the term of their original home loan. For example, someone with a 30 year mortgage at 7% may want to refinance to a 5.25%, 15 year mortgage.In this instance they are not pulling cash out they are just changing the rate and/or the term of their original loan. During the “refinance boom” (2001-2004) many loan officer and mortgage brokers did dozens and dozens of rate and term refinances because mortgage rates dropped so low.Most people refinance when their home loans when the market rate is much lower than their current mortgage rate. A good rule of thumb is when you can save about 1% it may make sense to refinance.The second type of refinance is called a Texas Cash out Refinance. This is when someone wants to pull cash out of their home in addition to lowering or changing the rate or term.Texas once outlawed the ability to pull cash out of one’s home but now allow this as long as the loan meets these criteria:80% Texas Cash Out Rule: This rule states one that the loan can not exceed 80% of the home’s appraised value.For example, if one’s home is worth $100,000 and the current mortgage owed is $50,000 than an equity loan can go up to $80,000 (80% of 100k). Thereby netting the borrower $30,000, less closing costs.3% rule: This rule state that the total fees can not exceed 3% of the loan’s value. For example, if someone does a 100K equity loan the total fees can not exceed $3000. This means broker, title, survey, appraisal, underwriting, doc/prep (everything!) can’t exceed 3%. This law was intended to protect borrowers but it actually penalizes lower loan amounts making it difficult for those with small loans to take advantage of their equity.This is a great example of regulation doing the opposite than what it was intended. So for those with loan amounts under 100K, it’s very difficult to do a home equity loan as state law also requires one to purchase a new title policy each time one refinance. Title policies usually run 1% of the loan amount.However, it’s important to note that the 3% law does not apply for those doing an investment cash out home equity. So it’s actually easier to do a home equity loan on an investment property than on an owner occupied property in Texas!12 Day rule: This is one of the more unique rules. Whenever you do a home equity loan your loan officer or mortgage broker will ask you to sign a 12 day form. This form states that the loan can’t close until 12 days after the date of the application. I guess the state of Texas wants you to have 12 full days to think about your loan!3 day rule: Then, after we wait 12 days, we are required to wait 3 days until we fund. Not to mention one is required to look and sign the final HUD (settlement statement) 24 hours before closing.So to make things simple: The loan can’t close for 12 days. Then, once the HUD is prepared by the title company the borrower(s) must review and sign the HUD 24 hours before we close. Then we can’t fund the loan for 3 full business days.These rules are why it often takes 30 full days to fund a Texas Cash out loan.Oh, and by the way. The final rule…one must wait 12 full months between home equity loans. So if you do a Texas cash out one year and the price of your home goes up significantly you must wait a year before refinancing.Because Texas home equity loans have so many rules it is important your mortgage professional truly know the rules so everything goes smoothly with your refinance.

Latest News

Digital Marketing for Beginners

Digital marketing for starter, Let to basic learning about connecting with your audience in the right place at the...

What are 7 things poor people do that the rich don’t?

1. poor people watch TV in which people read books how many hours you spend in front of the TV and when was the...

Top 18 best small business ideas for beginners starting

A small business can be frightening and requires plenty of careful planning there are many small business ideas which can be beneficial as well...

Summer that makes you happy

We saw were already here I've been thinking about some of the things. I used to do with my husband even though he had...

4 Point to helpful tips specifically for caregivers

What you need to take a vacation. I know it sounds impossible creative and try to make it work for you almost everyone needs...

More Articles Like This