Texas Refi question

highruss · Joined: 20 Feb 2008 Posts: 1 1.37 Dollars($)

Ok...I hope you can understand my question...
we have a home in dallas with a home equity mortgage balance of 119k and appraisal of 197k we also have a home improvement loan at 38k. we would like to: take the home equity loan and consolidate or cash out for cc debt and a car loan...and we would like to keep the 38k as a different payment because of the 80% ltv rule....if we can not do that a must combine the 119k and 38k...could we get a 2nd mortgage to consolidate-one that does not have a 80% ltv issue...i'm trying to find a loop hole if we need one...thanks!

helping_user

Welcome Highruss.

What I have understood from your post is, you have a mortgage balance of 119K and a home equity loan of 38K. How much is your total debt comprising of cc debts and the car loan? Depending upon the debt amount, you can refinance the first loan having balance 119K with a cash-out option. The total loan amount will not exceed 80% of the current appraised value.

Thanks.

lisascherzer · Joined: 04 Jan 2008 Posts: 575 66.11 Dollars($)

Texas law wont allow you to borrow more than 80% of the value of your home weather it is one one or two loans. So the option of taking cash out on the first and leaving the second really is not an option. The only option you have in texas to get all of your equity out of the home is to sell the property. Probably not the best solution either.

I really think Texans should rally together and get rid of these laws that restrict residents of being able to make free choices of how much they want to borrow against the collateral they own. You paid for it, you shoudl be able to do what you want with it.

ckalvesmaki · Posted: Thu Feb 21, 2008 8:02 am Post subject:

Lisa your answer isn't quite right......

The answer to your question is slightly more complex than using the 80% rule. The HELOC is an A6 loan ie equity loan. The laws in TX forbid 2 equity loans on the same homested.....so your only choice would be to do a cash out refi to 80% paying off the current second as well. Assuming the HELOC is at least 12 months old....

HOWEVER.......and there is always one of those.....if 100% of the proceeds went directly to the home improvement company........and this can be proven and you do not have any other draws on the HELOC.then.....you MAY be able to do a cash out refi on the first and get a subordination agreement on the second.......BUT lenders are always wary of TX loans and I have never actually scene one do a loan with cash out to 80% on the first and leave a second with a higher CLTV......because they are gunshy when it comes to TX regulators.....but LEGALLY it can be done.

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