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HELOC affecting later refinance in Texas

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kjh55 Guest	Posted: Sun Aug 16, 2009 11:00 am    Post subject: HELOC affecting later refinance in Texas Like 0 Dislike 0 I have been told by a mortgage banker that taking a HELOC will definitely affect any future mortgage refinance I might do on the same property by adding .5% or more to the rate I am qualified for, even if the HELOC has been fully paid off, the line of credit closed, and the second lien released. This makes no sense to me. It sounds like I am being penalized for having a line of credit, which I may not even use. If I do use it, I would certainly pay it off and cancel the line of credit prior to any other mortgage refinance. Is there some obscure Texas law that causes this? I can understand how a HELOC might affect a refinance while the HELOC is being used and there is a second lien on the property. I cannot understand how a HELOC that has been closed and the lien released could have any effect on a refinance rate unless the borrower has a poor payment history. Any insight into this would be greatly appreciated.
smithsussane Joined: 18 Sep 2008 Posts: 10439 Location: Alaska 985.83 Dollars($)	Posted: Sun Aug 16, 2009 7:53 pm    Post subject: Like 0 Dislike 0 Hi kjh! Welcome to forums! As far as I know, in Texas, if you have a 1st loan and you take out a home equity loan or HELOC, it will be considered as a Texas A6 loan. It should be noted that a home cannot have more than one Texas A6 loan. Also, a Texas A6 loan cannot be refinanced within the first 12 months. To know more about Texas A6 laws, check out the following link: http://www.mortgagefit.com/texas/a6loan-law.html#23849 However, if you pay off the HELOC and then try to refinance the first loan, then I don't think you should face any issues. I would suggest you to speak to your lender and ask him to explain as to why a HELOC would affect your future refinance. Feel free to ask if you've further queries. Sussane
fredwaltz Joined: 17 Aug 2009 Posts: 60 1.12 Dollars($)	Posted: Mon Aug 17, 2009 6:16 am    Post subject: Like 0 Dislike 0 hi kjh55 I think closed HELOC will have some 'good' effect on the customer's perspective.Person goes for refinance when one is having problem for repayment, so even if you were provided HELOC you haven't used it that means you are not in problem for repaying the mortgage. Banks are not going to loose their money by restructuring the mortgage of 'good paying customer'.

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