The state of Texas has some pretty interesting refinance rules. This is especially true when it wants to withdraw cash or equity from their home.
There are two types of mortgages refinances. Type is called a rate and term refinance. It's easy when someone wants to lower their rates or changes in the duration of their original home loan. For example, someone with a 30 year mortgage at 7%, May want to refinance at 5.25%, 15 year mortgage.
In this case it is not pulling cash out they just changed the speed and / or duration of their original loan. During the "refinance boom" (2001-2004) many loan officers and mortgage brokers are not dozens and dozens of rate and term refinances the mortgage rates dropped so low.
Most people when you refinance your home loan when the market rate is much lower than their current mortgage rate. A good rule of thumb is when you can save about 1% might make sense to refinance.
The second type is called the Texas refinance cash out refinance. This is when someone wants to withdraw cash from your home to reduce or change the course or term.
Texas outlaw the ability to withdraw cash from their home, but now allow it as long as the loan meets the following criteria:
80% of Texas Cash Out Rule:. This rule states that a loan can not exceed 80% of the appraised value of the house to
For example, if a home is worth $ 100,000, and the current mortgage owed is $ 50,000 of equity loan can go up to $ 80,000 (80% of 100k). This network of borrower $ 30,000, less closing costs.
3% rule: This Rule states that the total fee shall not exceed 3% loan to value. For example, if someone does not 100K equity loan total fee not to exceed $ 3,000. This means the broker, title, survey, appraisal, underwriting, doc / prep (everything!) can not exceed 3%. This law is intended to protect borrowers, but it actually penalizes smaller loan amounts, making it difficult for those with small loans to take advantage of their capital.
This is an excellent example of regulation is the opposite of what was intended. So, for those with loan amounts under 100K, it is very difficult to make a home equity loan as a state law also requires one to buy a new title policy each time a refinance. Title policies typically run 1% of the loan amount.
However, it is important to note that 3% of the law does not apply to investments they make money from home equity. So, it's actually easier to make a home equity loan for investment property than on owner occupied property in Texas!
12 day rule: This is one of the more comprehensive rules. Whenever you are not home equity loan a loan officer or mortgage broker will ask you to sign up 12 days form. This pattern says that loans can not be closed until 12 days after the date of the request. I think the state of Texas wants to have 12 full days to think about your loan!
3. Days rule: Then, after we wait 12 days, we are required to wait three days until the fund. Not to mention a need to look at and sign the final HUD (settlement statement) 24 hours before closing.
So, to keep things simple: the loan can not be closed for 12 days. Then, after the HUD is preparing the company name of the borrower (s) must review and sign the HUD 24 hours before we close. Then we can not finance the loan for 3 full working days.
These rules are therefore often takes 30 days for full funding of Texas money from the loan. Because Texas home equity loans are so many rules that it is important to your mortgage professional you really know the rules and everything goes smoothly with your refinance.
