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Hi, has anyone here heard of a6 laws or something like that? I am looking to refi my property in Texas. Any info will be helpful.

adonis · Posted: Wed Mar 14, 2007 11:50 pm Post subject: Texas mortgage refinance

Welcome Jacey,

In Texas, there is a law related to cash-out refinance. This law is known as the a6 law which allows a lender or a mortgage company to offer cash-out loan for a maximum of 80% of the property-value.

kenstampe

Jacey,

I've been doing loans in Texas for over 10 years which puts me just prior to the legislation changes. The state constitution details what can and cannot be done with our primary residence or "homestead". In the Homestead Act, Article A, Section 6 (thus the A...6) is where the changes were made back in 1996/97 that enabled Texans to do a cash-out loan.

There are many unique requirements, some of which make very little sense to people. These requirements only apply IF you are:

1) financing on your primary residence.
2) you are refinancing an existing note additional money for debt consolidation or simply cash to you
3) OR you are taking out a new loan for debt consolidation or cash out to you
4) the refinancing of a loan which was created as a Texas A6 home equity loan. Once a home equity loan....always a home equity loan.

A Texas A6 home equity loan is NOT one of the following:

1) A refi loan to change the interest rate or terms of an existing loan that was used to purchase the home
2) Refinancing to combine a 1st lien and 2nd lien that were used to purchase the home
3) Refinancing plus cashing out to pay an ex-spouse's portion of the equity
4) Refinance plus cash out where the cash out is to ONLY pay back state, local or federal taxes
5) A refi plus cash out where the cash out is done as a bona fide home improvement loan where funds go directly to the contractor.

Unique features of the Texas A6 home equity loan are:

1) borrower must be given a notice of their rights and the loan cannot close earlier than 12 calendar days from when this notice is received.
2) a home cannot have more than one Texas A6 loan on it at a time
3) a Texas A6 loan cannot be refinanced within the first 12 months
4) a Texas A6 loan cannot be done if the total mortgage financing will be greater than 80% of the home's value.

There are more little nuances but this should get you started. If you have more questions, post them here and we'll get the answers for you.

helping_user

Ok Ken,

So you mean to say that a Texas a6 loan is a home equity loan. It can be taken out to do a cash-out refinancing on an existing note or when one intends to consolidate debt.

I am not so clear about the third requirement. Is it that one can apply for texas a6 mortgage when he wants a completely new loan to consolidate other debts? Or do a cash-out for improvements or pay off other bills? Pls explain

Thanks in advance

kenstampe · Posted: Thu Mar 29, 2007 11:43 am Post subject: Texas A6 law cash out refinance

Anytime you are pulling cash out of your home, regardless of lien position, it falls into a Texas A6 loan category. So if you have an existing 1st lien you refi Plus cash, that is a Texas A6 governed transaction. If you have a 1st lien and you don't refi but instead take out a 2nd lien home equity loan or HELOC that ALSO falls under Texas A6 governance.

I hope that helps...

helping_user · Posted: Fri Mar 30, 2007 12:03 am Post subject: RE:

yeah definitely it helped Smile

Guest

Yes, unfortunately - the State "labels" Texans, when they do a Texas A6 OR what is called a "cash-out" against THEIR PRIMARY RESIDENCE.

(if you have investment or a second home = does not apply.)

you can ONLY do a Texas cash-out every 1 year + 1 day from the date that the last A6 funded.

so if you wanted to refi at a lower % rate 8 months later - you (sorry) still have to wait for 12 mos + 1 day to fund your next loan.

call me for help.

Jeff
512-263-3132

BrianDelaCruz · Posted: Mon Jun 18, 2007 5:25 am Post subject: RE:

Hi Jeff,

Welcome to our community.

Thanks for sharing your knowledge with the community.

We hope that you'll have lots of fun interacting with people here.

With best wishes Smile

Brian.

Guest

Just what I wanted to know about this refi options in Texas especially the Texas a6 cash out refinance law - thanks for the concise information!

miller_st · Joined: 17 Jan 2007 Posts: 918 168.95 Dollars($)

Feel free to ask any other thing you would like to know about Texas mortgage refinance and the A6 law Jentimus. We will try to help you out in every possible way.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Jentimus,

It's really nice if you've have been benefitted from the community. Do not hesitate to ask any further question.

Guest

I am builing a new home, but have not yet sold my old home. I entered into my current mortgage about 5 years ago, and it was a Texas cash out mortgage. It is likely that I may need to close on my new home before I sell my old home. Am I eligible for a home equity line of credit in Texas on my old home (to get some cash out for closing on the new home), or do I have to refi my current mortgage? Thanks.

jenkin7 · Posted: Thu Nov 15, 2007 4:42 am Post subject: Texas A6 cash out refinance

Hello Tim,

Your query has already been answered at http://www.mortgagefit.com/texas/cashoutrefinance-heloc.html

Have a look at it.

Guest

I truly don't understand why Texas legislators would make a law that says I cannot refi my own property as often as I want, so long as I can afford it and am not in debt or default on anything. They did nothing to keep out low-interest, ARMs a few years ago, and now are talking about bailing them out. Yet they will not let me refi my loan, at the currently available rate that cut my payments by $150/mo AND let me pay it off 10 years earlier, just because I refi'd my ARM (which I could afford) into a Fixed 8 months ago. Is there a loop-hole or way to get around this obviously stupid law that doesn't benefit the homeowner in any way? My bank is willing, it would be with the same bank, on the same property, just a better rate.

Niicss · Posted: Tue Apr 08, 2008 2:58 am Post subject: Texas a6 cash out refinance

Welcome Ann,

You cannot go for a Texas mortgage refinace within one year since you have taken the mortgage. After one year you can be able to go for refinancing. Actually in ARM also your rate is not adjusted before one year.

So one should shop around and think twice before taking a mortgage whether they can afford it or not so that they need not to refi within a year.

Let me know if you have any more queries.

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