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Texas Section 50a6 Loans:

OK - help me out here. I have a pay-option ARM 1st lien and a HELOC loan from a bank. Can I do a refinance cash-out fixed rate loan to combine the two loans I have now?

miller_st's picture
miller_st | Joined: January 17, 2007 04:47 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

For a cash out refinance in Texas as per the law which is known as A6 law a cash out refinance cannot be more than 80% ltv. So you need to check if the combined value of both these loans is exceeding 80% ltv or not.

You can read more about this A6 law from here: http://www.mortgagefit.com/texas/a6loan-law.html

Miller

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:52 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

With closing costs, refinancing both loans come to LTV of 71%. Both loans have been in place over 12 months.

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:52 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

[quote:6bb9bb1278]OK - help me out here. I have a pay-option ARM 1st lien and a HELOC loan from a bank. Can I do a refinance cash-out fixed rate loan to combine the two loans I have now?[/quote:6bb9bb1278]

If cltv is coming to 71% (lower than what is required - 80%) then there should not be any problem with able to refinance both loans into one fixed rate one.

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larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi DonBi,

According to A6 law in Texas, a cash out refinance cannot be done if the total value of the loan to be provided is greater than 80% of the property value. So you need to consult with a lender and find out the value of the loan when combined together. If it is not exceeding 80% of the value, then you can very well qualify for the refinance. But you should remember that it cannot be refinance within first one year.

Like | Dislike | Share | Posted: Thu, 02/04/2016 - 23:52 | Post subject:

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Don,

It's a good decision to refinance both the pay-option ARM and Heloc. This is because the option ARM brings about what is known as negative amortization due to which you owe more than the monthly interest you pay. But just keep in mind that you can refinance only up to 80% of the home value.

Hope this helps...

God bless you.

Samantha

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