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rowdiereaux · Joined: 25 Aug 2008 Posts: 1 1.41 Dollars($)

If you refinance a mortgage in TX, you can only refinance 80% of the "value" of the property?

Please explain this further for me. I have a mortgage of aprox. $220,000, BUT I would like to refinance it for $268,000 to consolidate all my other debts. Would that be possible? It would possibly appraise for $268,000. Also, what is the issue with ag exemptions on property being refinanced??????? Texas has some strange mortgage laws.
Thanks for any help you can give.

ckalvesmaki · Posted: Mon Aug 25, 2008 5:32 pm Post subject:

Tha max loan amount for a cash out refi in TX is 80% of the value. You are not allowed cash out over that amount with a few notable exceptions. The laws are governed by the A6 laws the section of the TX finance code as it relates to mortgages.

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.

Guest

Thanks so much for answering my posting. This will indeed get me started with I need to do.

Guest

my home is appraised at $125,000 and I owe the bank $55,000. What is the maximum I can refinance to put some money in the bank and pay all my bills_

sara · Posted: Fri Sep 12, 2008 3:30 am Post subject:

Hi Juan,

Welcome to the forums.

If you are in Texas and need to do refinance with some extra cash, you can maximum go for a loan amount worth 80% of the property-value. Such a transaction in Texas is carried out based on Texas A6 Refinance Law .

Take Care

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

Hi Juan,

I wouldn't suggest going more than 80% of the appraised value since you will incur PMI. Also, if you can stay at 70% of the appraised value, the interest rate will be about 1/8% less than going 80%. So it really depends if you feel that extra 12,000 will be worth a slightly higher rate. If your looking for the best terms, stay at 70%. That way you have options if you want to refinance in the future and won't risk being "maxed out".

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