Nowadays, homeowners can utilize a Texas cash out refi and tap into the low-interest rates and equity of their homes. Recently, Texas homeowners chose to pay cash for each of their home purchases. The reason for this is the competitive nature of the Texas real estate market where it is believed that paying cash can secure their dream house.
Today, the equity of homeowners and the home values keep rising. Living in a house that’s paid can be great, but it is not good when it comes to your financial resources.
Last 2017, there were new laws that have affected the Texas cash-out refi loan. If you are a Texas borrower, it is best to take note of the new rules. Here are some of the changes.
- For at least one year just after getting a Texas cash-out to refinance loan, you can refinance a conventional loan without the need for a cash-out. You first have to wait a minimum of 12 months from the Texas cash-out refi closing date.
You can get refi easily with a conventional loan at a smaller interest rate. On the other hand, you can borrow at more than 80 percent for a conventional loan refinance without any cash taken. For example, it is possible to refi using a non-cash-out FHA loan that’s up to 97.75 percent.
- You can qualify for a Texas cash-out refinance loan if you have a land that you use for agriculture. This can be land that’s for ranging purposes or any agricultural. By filing for an agricultural exemption, you can lower your property taxes.
- The loan fee is lowered to 2 percent from 3 percent. This fee, however, does not include the survey and appraisal costs, title exam report, title insurance premiums, or discount points that are used to buy the interest.
The Texas cash-out refinance loan offers a lot of benefits and advantages including obtaining extra funds, lowering mortgage rate and shorten repayment.
But before we delve any deeper, what is the Texas cash-out refinance loan?
Texas Cash-Out Refinance Loan
Also known as Section 50(a)(6) loan, the Texas cash-out refinance loan allows you to refinance your mortgage. Aside from that, you can also tap into the equity of your home. This can convert into money which will be paid out at closing. You can use the cash for anything including paying your debt or making some home improvement.
It is also a good option if you need extra cash or wants to refinance. You can get it at a fixed interest rate. It also offers peace of mind and stability than HELOCs variable rate. Aside from that, your mortgage interest can be tax deductible. However, you first have to check with a professional if it is since the recent tax law changes may apply.
To be eligible for the Texas cash-out refinancing loan, you first have to earn more than 20% of the equity of your home. Any primary residence may qualify as long at it does not exceed 10 acres. Rural properties are considered to be at a maximum of 100 acres.