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Home Equity Loans in Texas
A few notes of importance:
Before applying to obtain a cash out loan in Texas, you have to realize that you are limited, by State Law, to a maximum of 80% LTV for the new loan. So, if your house is worth (appraised value) of $200,000, then the maximum loan you can get, including any/all closing costs involved is $160,000. So, if you currently owe more than $160k on your current mortgage on the house, you wiil not be able to obtain a home equity loan in Texas. I only say this to save you some time and effort if it is your desire to get cash out or obtain a debt consolidation loan on your homestead property. You can also use this figure to estimate as to how much cash will be available to you from your new loan as a maximum amount.
You can also expect that your options will be more limited than if you were looking to simply do a rate/term refinance (refinance the balance of an existing loan) or purchase a home. Your options are more limited because not all lenders will do Texas Cash Out loans. The reasons are a combination of them not willing to adjust to the more stringent documentation requirements of the Texas Home Equity loan, some are simply because they believe the documentation and legal restrictions are simply too much of an additional burden on them to offer these types of loans. Understand that while the process itself is not that different from the consumer stand point, from a lenders stand point the differences are more unique and do require the lenders to essentially have a seperate set of documents and, most likely, additional staffing just to manage and keep up with any/all changes to Texas Law regarding these loans.
The application process will be essentially the same as any other mortgage loan. You contact your mortgage broker or one or more mortgage lenders, give them your information and you are on your way. Once your applciation and credit have been evaluated, you will, as in any other mortgage transaction, receive a Good Faith Estimate and Truth in Lending within 3 days of you giving your information on an application. This can be used to compare your offers and to help you make an educated decision as to which lender/broker to go with. Once you have made the decision as to which company you will use, you will then be sent a disclosure package which will contain initial RESPA disclosures, other state required forms, lender required forms, and a list of items that you will need to provide along with these documents in order to get your loan completed. I have another section for disclosures (posting to be completed shortly), so I won't go into the specific disclosures other than the ones that apply strictly to Texas Cash Out loans.
You can expect your loan to take longer than a standard mortgage loan. The reason is that Texas Law requires a 12 day cooling off period, so, your transaction cannot take place for at least 12 days after you sign that document which essentially states your rights as a consumer. In most cases, the delay may only be a couple of days as during that time period the normal other items can be taken care of simultaneously, ie., the appraisal, preliminary title report, and the gathering of the required documents from you, the consumer. I am simply saying that if you are anticipating your loan to done inside of two weeks, then you know now, that it is simply not possible.
Once your documents are in the hands of the company you chose, and the appraisal and title work are done, then the loan is underwritten and final approval is given as in any other mortgage transaction. At this time, there may be some outstanding conditions, or other documentation that may be required to be provided due to individual circumstances and/or is something was simply left out or missing from your file. Once those documents are provided, and your loan is cleared of all pending conditions or documentation, then the closing time/date is set and your documents are sent to the title company which prepares the documents for closing.
One item of note here, Texas Cash Out loans are required to be closed at a title company location, they cannot be closed in the customer's home as some mortgage transactions are. This is strictly forbidden by Texas Home Equity Lending Laws, so don't expect anyone to come to your home out of convience for you to close your loan, it just won't happen in Texas.
Additionally, once your closing is set, it is a requirement that each owner of the property be given the HUD-1 settlement statement at least 24 hours prior to closing the loan. If any changes are made to the settlement statement before closing, then another 24 hours must be allowed before closing the loan, again, this is not optional. The reality is, in my opinion, this is actually a very good thing and one of the better laws that Texas has pertaining to home equity lending.
The fact that the consumer gets to see the actual HUD-1 settlement statement a day before the loan closing gives them the opportunity to ask questions and to make certain that everything is correct OR as stated on their initial Good Faith Estimate. This means that there can be no surprises at the closing table. If it were up to me, all consumers would get the HUD-1 one day prior to closing, that way all questions can be eliminated and it would make the closing go that much smoother as you would already be aware of exactly what the settlement statement has on it before you get to the closing table - that is for another discussion.
After you sign the documents there is a 3 day right of recission, as on all mortgage refinance transactions on owner occupied homes. This means, quite simply that once you sign, you are given copies of all documents and given 3 business days (Saturdays count) to review all documents and make your final decision as to whether or not you want the loan. Keep in mind that the decision is YES, unless you decide to say no. So, if you sign documents on Monday, you are given until midnight of Thursday to cancel the transaction, you loan funds on Friday. Friday is too late to cancel. So, if you are going to cancel, make cetain that you notify the title company as soon as possible but you only have until Thursday to do it.
Once your loan funds and you are given your proceeds (cash or payoff sent off), then you are done. Keep in mind that you cannot complete another Texas Cash Out loan for 12 months (1 year) to the day of your loan funding, without exception. You can't even sign the initial disclosures on a new loan until after that 1 year is up. The reason I mention this is so that you realize that you only get one shot a year to do a loan like this, make sure you get what you need the first time because it will be a long time before you can do it again.
Any questions pertaining to this information can be emailed to me or you may simply comment on this post and I will respond back to you.
My next article will be about the what is required for a mortgage loan.
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MORE RESOURCES updated Mon. July / 06 / 2020
'Refinancing isn't free:' How to navigate refinancing a mortgage Community Impact Newspaper
How to refinance your mortgage Fox Business
2% mortgage rates: Real or marketing gimmick? | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
2% mortgage rates: Real or marketing gimmick? | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
Successfully Refinancing Your Mortgage Isn’t Just About Getting A Great Interest Rate. Here’s What Else You Need To Look For - Forbes
Successfully Refinancing Your Mortgage Isn’t Just About Getting A Great Interest Rate. Here’s What Else You Need To Look For Forbes
How to start refinancing your mortgage this weekend Yahoo Finance
How Often Can You Refinance Your Mortgage? Credible News
How to choose the right kind of refinance for you Bankrate.com
Current Refinance Rates, June 12, 2020 | Rates fall Bankrate.com
Refi Rates Today, June 22, 2020 | Rates rise Bankrate.com
COVID-19 Mortgage Help for Vets: The VA IRRRL | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
COVID-19 Mortgage Help for Vets: The VA IRRRL | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
Jim's Mortgage Corner | Real Estate The Grand Junction Daily Sentinel
Record mortgage applications as Americans rethink importance of home: Quicken Loans CEO - Fox Business
Record mortgage applications as Americans rethink importance of home: Quicken Loans CEO Fox Business
Looking to refinance your mortgage? Greater Alliance offers options to fit your needs - Jersey's Best
Millennial mortgage activity increases during peak of home-buying season - Mortgage Professional America
Millennial mortgage activity increases during peak of home-buying season Mortgage Professional America
Dwight Capital Provides $42M HUD Loan on Washington Rental Property Commercial Observer
Mortgage refinance: Everything you need to know Fox Business
Ask Bankrate: Questions about house payments and retirement, student loan debt and more - Bankrate.com
Ask Bankrate: Questions about house payments and retirement, student loan debt and more Bankrate.com
Is now the best time to refinance your mortgage? Fox Business
When should you refinance your mortgage? Fox Business
How to get the best mortgage refinance rates Fox Business
Using Data to Identify Members Ready for a Mortgage Refinance Credit Union Times
Is a Cash-Out Refinance a Good Idea? Yahoo Finance
Mortgage refinancing surges as interest rates dive, but can you get a home loan during coronavirus? - ABC News
Mortgage refinancing surges as interest rates dive, but can you get a home loan during coronavirus? ABC News
Mortgage refinance applications spike 79% as homeowners rush to take advantage of lower rates - CNBC
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears - CNBC
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears CNBC
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world - MarketWatch
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world MarketWatch
How does mortgage refinancing work? Bankrate.com
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 - Business Insider
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 Business Insider
Rushing to Refinance Your Mortgage: 6 Tips and What to Avoid The New York Times
Weekly mortgage refinance applications spike 15% as interest rates plunge to lowest in nearly 4 years - CNBC
Weekly mortgage refinance applications spike 15% as interest rates plunge to lowest in nearly 4 years CNBC
The impact of the coronavirus on mortgage refinancings Brookings Institution
The basics of no-closing cost mortgage refinancing Fox Business
Should you join the rush and refinance your mortgage now? Washington Post
Right now would be a good time to refinance your mortgage Tampa Bay Times
Best mortgage refinance lenders of 2020 Loop North News
The Mortgage Rates 'Sweet Spot' is Finally Here. Should You Refinance? | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
The Mortgage Rates 'Sweet Spot' is Finally Here. Should You Refinance? | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
The 8 Best Mortgage Refinance Companies of July 2020 | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
The 8 Best Mortgage Refinance Companies of July 2020 | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
2.5% mortgage rates are here. What's next — 2? Or even 1%? | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
2.5% mortgage rates are here. What's next — 2? Or even 1%? | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
5 Questions to Ask Before You Refinance Your Mortgage HowStuffWorks
Refinancing my mortgage for a lower rate wasn't exactly easy, but it was worth it — I'm going to save $42000 over the life of the loan - Business Insider
Refinancing my mortgage for a lower rate wasn't exactly easy, but it was worth it — I'm going to save $42000 over the life of the loan Business Insider
Mortgage refinance applications fall to lowest level in over a month National Mortgage News
Is It Time to Refinance Your Mortgage? The Wall Street Journal
Should You Refinance Your Mortgage Right Now? Clark.com - Clark Howard
Pros and Cons of a Cash-out Mortgage Refinance HowStuffWorks