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Are there no prepayment penalties on a Texas Cash out?

Guest

I would like to ask a question to clarify some of the posts above. I want to refinance my home mortgage, take cash out to pay off some other debts, and pay off an existing HELOC. Once I do that, can I take out another HELOC just so I can have some cushion if I need it. My loan to value is very low, about 46%, so I have plenty of equity. Or would this be prohibited under the "only one A6 loan at a time" provision? Thanks.

Guest

I've looked around a bit, but haven't found a definative answer. Does rolling the closing costs into a refinance constitute an A6 loan, if no other cash is received by me? Or would that still be a rate and term refinance?

I'm attempting to apply for the new "Home Affordable Refinance" program offered by Fannie Mae, part of the housing stimulus package. It's for homeowners who's property values have dropped, no longer hold 20% equity, mortgage currently held by Fannie Mae, and are not paying PMI, and haven't been late on any payments yet; all of the above for me, so sounds like a win. The problem is, I've probably only got 10% equity now and I want to roll in the closing costs. That's not a problem for the FM program, since it allows up to 105% LTV, but in Texas if rolling in closing costs constitutes an A6 then I can't have any more than 80% LTV, so it's a deal breaker.

savior70 · Posted: Fri May 22, 2009 7:21 am Post subject:

Hi

To M. Haden,

If you prepay your Texas A6 loan, you may not have to pay any prepayment penalty. Check out the Section 50(a)(6), Article XVI, Texas Constitution where the points marked as (G) has a reference to this prepayment penalty. You'll find it at "https://www.senderra.com/assets/docs/Texas%20Constitution%20Requirmen ts.pdf".

To Clay,

You're allowed to take out one Texas A6 loan at a time. So, If you're going to do a cash-out refinance, you aren't supposed to qualify for another equity loan.

To JayDub,

Rolling the closing costs into the loan and doing a cash-out refinance are two different things. If you roll in your closing costs into the Home Affordable Refinance plan, I don't think it will be considered as a cash-out refinance. If it's not a cash-out refinance, the rule of 80% LTV under Texas A6 refinance, shouldn't apply.

Guest

I was told that you can't do a cash out refinance on a multi-family structure even if it is homesteaded and primary residence. Is that true?

Thanks in advance.

seaton · Joined: 17 Jun 2009 Posts: 1 1.23 Dollars($)

Guest

I am in the middle of refinancing my mortgage to consolidate my 2 primary mortgages , which I got 5 years ago to purchase my homw. I am trying to lower my interest rate and save $. I have good credit and a solid appraisal. I live in a suburban area on the water. I am being told that I may not qualify for refinancing because I do not have 3 of 5 municipal services. I have water and electric, but not sewer, gas or storm drain. They are not an option, not available. Does sound right??

Guest

My Loan to Value is very good

Guest

When we refinanced and consolidated our debt we took out a cash out back in 2004. In 2008 we went to our credit union and asked for a home equity loan which they lent us money to pay off bills. Is this also a cash out even though they call it a home equity loan? My question is how many cash out loans are you allowed on your property, in the State of Texas?

savior70 · Posted: Mon Jul 06, 2009 7:03 am Post subject:

Hi Cindy,

As far as I know, you can do a cash-out refinance on the property, provided there is enough equity in it. But you can cash-out only once in a year in Texas. So if you already have taken a cash-out on the property, you will not be allowed to cash out again until one year period is over.

Hi Seaton,

I think the second lien home improvement loan that you takeout will fall into Texas A6 loan category. When you are taking out an improvement loan, you are basically taking cash out of the property using the equity to make improvements to the house.

Guest

I was just told that I could not refinance my existing mortgage loan that was orginally taken 7 years ago because we took cash out on that loan.
Does that sound right?
I should be able to refinance if it has more than 1 year, shouldn't I?

Thanks!

jerry · Posted: Tue Aug 18, 2009 4:47 am Post subject:

Hi judy,

As far as I know, at least 3 out of 5 municipal services need to be available for the property to qualify for a refinance in Texas. Most lenders would want your property to have these basic services before offering a loan against it. However, you should talk with some other lenders. There could be some lenders who may still offer a loan on your property. But even if they offer a loan, they will charge exorbitant rates on the loan.

Hi gilbert,

A home equity loan is different from a cash-out refinance loan. In a cash-out loan, you take a new loan on your property which exceeds the existing loan balance. It allows you to pay off the current mortgage. Unlike a refinance mortgage, a home equity loan is a second mortgage. It holds a junior lien on the property and is paid off after satisfying the first mortgage. The equity in the property is used as collateral for the loan.

As far as I know, you can take only one cash-out loan at a time in the state of Texas. If you need another cash-out loan, you need to pay off the existing loan first. You cannot have two cash-out loans simultaneously.

Hi Elocin,

I think you should be able to get a new loan to refinance the existing loan. I know of a 1 year requirement i.e. you cannot refinance if you have taken a cash-out loan less than a year ago. Since you took the loan 7 years ago, there seems to be no reason why you cannot get a loan to refinance now.

Thanks,

Jerry

Guest

I have just been told by my bank that once you do a Texas A6 loan or a loan considered Texas A6, and you refinance again even if is out of the 1 year perameter, you cannot wrap your closing cost into the new loan. Once an a6 always an a6. Even if the new loan is a rate refinance. Is this accurate.

Guest

I have a first mortgage (used to purchase property) and a second mortgage which was a construction loan, paid to the contractor, for substantial home improvements (including additional sq ftge). Construction was completed in 2004.
I'd like to consolidate both loans into a lower-rate 15 year fixed loan. Is this a "cash out" loan under Texas law??

jenkin7 · Posted: Fri Oct 09, 2009 3:24 am Post subject:

Hi Bill,

It is true that an A6 loan always remains an A6 loan. Even if you refinance an A6 loan with a rate and term loan, it will still be considered as an A6 loan. You will not be able to wrap your closing costs into the new loan.

Hi Nancy,

I don't think the new loan would be considered as a cash-out loan, because you are merely using the equity in the property and taking out a large loan to cover both the mortgages. The existing loans are not Texas A6 loans. Thus, you can refinance it using a 15 year rate and term loan fixed loan.

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Texas A6 law: Cash-out loan and other refinance options