Posted: Wed Mar 14, 2007 11:37 pm Post subject: Does anyone know about a6 laws on refinance in Texas?
Hi, has anyone here heard of a6 laws or something like that? I am looking to refinance my property in Texas. Any info will be helpful. _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
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 refinance loan for a maximum of 80% of the property-value. _________________ Procrastination is the enemy of your financial sucess
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 refinance 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 refinance 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 refinance loan to change the interest rate or terms of an existing loan that was used to purchase the home
2) a refinance to combine a 1st lien and 2nd lien that were used to purchase the home
3) a refinance plus cash out to pay an ex-spouse's portion of the equity
4) a refinance plus cash out where the cash out is to ONLY pay back state, local or federal taxes
5) a refinance 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.
Posted: Sat Mar 17, 2007 2:16 am Post subject: texas a6 mortgage - home equity loan?
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 refinance 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
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 refinance Plus cash, that is a Texas A6 governed transaction. If you have a 1st lien and you don't refinance but instead take out a 2nd lien home equity loan or HELOC that ALSO falls under Texas A6 governance.
Posted: Wed Nov 14, 2007 3:48 pm Post subject: Texas A-6 laws and this scenario
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 refinance my current mortgage? Thanks.
Posted: Mon Apr 07, 2008 11:19 am Post subject: Once a year refi
I truly don't understand why Texas legislators would make a law that says I cannot refinance 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 the idiots that 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 refinanced 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.
You cannot refinance the mortgage within one year since you have taken the mortgage. After one year you can be able to refinance. 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 refinance within a year.
adonis
