refinance problem due to home Equity loan

Hi,

I had refinanced my home early last year with some cashout (total loan < 80% house value). Recently i had locked the lowest interest rate with another Mortgage broker, but after 5 weeks, broker is saying that my loan is declined by the lender.
The reason given is that my current loan is termed as 'Texas home equity' loan. I just have one loan, and never realized that it is an issue for any lenders.
Sad part is that now interest rate is increased (more than a point than the rate locked), and I do not have an option to refinance.
My qn to the experts :
Is it true that I should have applied the refinance differently than regular loan application ?. I am not refinancing more than 80% of the home value.
I just want to make sure that I am not being misled by the Broker due to the sudden increase in interest rate.

savior70 · Posted: Tue Jun 16, 2009 5:44 am Post subject:

Hi

There are several rules and regulations regarding Texas home equity loans. Some of those are as follows:

1. The total mortgage debt cannot exceed 80% of the fair market value of the property.

2. The borrower can obtain only 1 home equity loan per year. So, even if he repays the loan quickly, he cannot get another equity loan until 1 year has passed.

3. The borrower can get only 1 home equity loan against a property. He'll not be able to get a second equity loan until the first has been paid off.

Did you ask the lender which of the regulations apply in your situation? Did they tell you on what ground exactly you do not qualify for the loan?

Guest

According to Broker, it is #3. I wanted to talk to the Lender directly, but broker is refusing to disclose that info.
I just have one loan, and when I refinanced (more than a year ago), i combined my 1st, 2nd mortgage and took out some cash, and Total refinanced loan was less than 80% of the peroperty value.
When I looked at my loan ‘note’, my entire loan is termed as 'Home Equity Loan'
According to the Broker, I cannot refinance this type of loan with normal refinance application. I applied for the loan with normal loan application. No questions asked when i applied. Rate was locked (lat 4,625/30yrs), and Broker took more than 5 weeks to process it. At the end, it is denied. Now they are saying that i need to apply again and quoting 5.625.
My total payoff is still less than 80% of the property value and I am not taking cashout.

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