Posted on: 14th Mar, 2007 11:37pm
In the state of Texas, there is a law pertaining to cash-out refinance. This law is known as Texas cash out 50(a)(6). This is more popularly known as Texas a6 law. Under Texas refinance laws, you are required to take out a cash out loan of 80% of the appraised value of the property.
If you are a US citizen, a permanent resident alien or a non-permanent resident alien, then you may be eligible for this loan. However, if you are a foreign national or a borrower with diplomatic immunity, then you will not be eligible for this loan.
Eligibility criteria to get approved for Texas a6 cash out refinance are listed below.
Single family residences, warrantable attached/detached condos and PUDs classified as homestead under Texas a6 laws. Non-warrantable condos, non-warrantable Planned Unit Developments (PUDs), manufactured home etc. are however not eligible. Anyways, the minimum property area should be 600 sq ft. Property must be classified as a homestead under Texas refinance laws.
The minimum credit score required for this is 620. In addition to this, the maximum permissible DTI (debt to income) ratio is 45%.
You should have established a good credit score after you have filed bankruptcy and/or foreclosure. If your property has been foreclosed, then the waiting period to get approved for this loan is 7 years.
A continuous employment of 2 years is required. For self-employed persons, proper documentation of income is required.
Assets that are used to close the transaction must be disclosed. Funds that you use in the transaction must come from a verified source.
While taking out this loan, you should follow the Texas a6 cash out refinance rules properly. It is advised that you should get the help from a mortgage attorney for this.
If you are a US citizen, a permanent resident alien or a non-permanent resident alien, then you may be eligible for this loan. However, if you are a foreign national or a borrower with diplomatic immunity, then you will not be eligible for this loan.
Eligibility criteria for Texas a6 cash out refinance
Eligibility criteria to get approved for Texas a6 cash out refinance are listed below.
Properties
Single family residences, warrantable attached/detached condos and PUDs classified as homestead under Texas a6 laws. Non-warrantable condos, non-warrantable Planned Unit Developments (PUDs), manufactured home etc. are however not eligible. Anyways, the minimum property area should be 600 sq ft. Property must be classified as a homestead under Texas refinance laws.
Credit score and DTI
The minimum credit score required for this is 620. In addition to this, the maximum permissible DTI (debt to income) ratio is 45%.
Credit history
You should have established a good credit score after you have filed bankruptcy and/or foreclosure. If your property has been foreclosed, then the waiting period to get approved for this loan is 7 years.
Employment
A continuous employment of 2 years is required. For self-employed persons, proper documentation of income is required.
Assets
Assets that are used to close the transaction must be disclosed. Funds that you use in the transaction must come from a verified source.
While taking out this loan, you should follow the Texas a6 cash out refinance rules properly. It is advised that you should get the help from a mortgage attorney for this.
We have a 1st and 2nd mortgage (to avoid pmi) from when we first bought the house 8 years ago. We also have a pool home improvement loan where the lender took a 3rd position on the home. We want to refinance all 3 loans into one but the total combined will be above 80% of the value of the home. Do the Texas A6 rules apply in this situation? Or because none of these original loans are home-equity or cash-out refis can the combined new loan exceed 80%? Thanks for any info you can provide!
hi dee!
welcome to forums!
you've taken out a third loan in order to improve your home. if that loan is a home equity loan, then it might be considered as a texas a6 loan. you need to contact the lender to find out whether or not your loan was a texas a6. if yes, then you won't be able to refinance the loan if the combined new loan exceeded 80% of the home value.
feel free to ask if you've further queries.
sussane
welcome to forums!
you've taken out a third loan in order to improve your home. if that loan is a home equity loan, then it might be considered as a texas a6 loan. you need to contact the lender to find out whether or not your loan was a texas a6. if yes, then you won't be able to refinance the loan if the combined new loan exceeded 80% of the home value.
feel free to ask if you've further queries.
sussane
recently took on a home improvemnt loan in texas, Like to know if it is true if i have to wait a year to try to refinance and lump the mortgage and loan into one payment. My understanding i am not under the A6 loan terms due to the fact i got a home improvement loan that went to straight to the contractors.
As you've taken out a mortgage, you won't be able to refinance the loan immediately. You'll have to wait for at least 8-10 months in order to get a mortgage refinance.
Welcome MHcruiser,
A Texas A6 loan cannot be refinanced within the first 12 months. Thus, I don't think you won't be able to apply for the refinance before that time period. You will have to wait for 12 months and then apply for a mortgage refinance.
A Texas A6 loan cannot be refinanced within the first 12 months. Thus, I don't think you won't be able to apply for the refinance before that time period. You will have to wait for 12 months and then apply for a mortgage refinance.
We have a normal primary 15-yr fixed mortgage on 50% of the home's value (5 years old). We also have a 20-yr fixed TX-A6 loan on 18% of the homes value (2-years old).
The primary loan rate is 5.00% fixed, and the secondary is 5.9% fixed.
We are looking to consolidate these two loans into a single 30-year fixed. Would the single consolidated loan be considered an A6 loan?
Looking for thoughts on whether it's a good idea to combine the two, or try to refinance both independently to capture today's rates, and extend the term length (no more cash out this time around).
Thanks for the help!
The primary loan rate is 5.00% fixed, and the secondary is 5.9% fixed.
We are looking to consolidate these two loans into a single 30-year fixed. Would the single consolidated loan be considered an A6 loan?
Looking for thoughts on whether it's a good idea to combine the two, or try to refinance both independently to capture today's rates, and extend the term length (no more cash out this time around).
Thanks for the help!
Welcome Guest,
Rather than refinancing both the mortgages independently, you should refinance both of them into one. Refinancing the loans into a 30 year fixed won't make it a Texas A6 loan.
Rather than refinancing both the mortgages independently, you should refinance both of them into one. Refinancing the loans into a 30 year fixed won't make it a Texas A6 loan.
Thanks for the quick response adonis. However, your comment seems to contradict others on this thread. Specifically the 'Once an A6, always an A6'. If an A6/HEL loan is refinanced, the new loan is also considered an A6/HEL. I believe this is special in Texas, where I reside.
When we got the A6/HEL, we didn't fully understand the future implications of how that loan limits our refinance options today. I want to make sure I do this refinance right, weighing all the future implications properly this time.
When we got the A6/HEL, we didn't fully understand the future implications of how that loan limits our refinance options today. I want to make sure I do this refinance right, weighing all the future implications properly this time.
I just spoke with a person at the Office of Consumer Credit Commissioner, and they informed me that combining my two notes would in fact make the new loan a first lien position A6/HEL loan -- with all the restrictions (and rates) that go along with that in Texas.
I'm likely gonna refi both notes separately as to not pollute my existing Rate/Term loan.
I'm likely gonna refi both notes separately as to not pollute my existing Rate/Term loan.
This law is confusing and doesn't make sense. Im trying to refi without taking out cash, Im just looking to obtain a lower interest rate. I still need to have 80 percent equity. Why does it matter if im not taking any money from the equity, Im just trying to get a lower interest rate.
You can go for a normal refinance if you've equity in your property and try to lower your interest rate.
This home equity law is nuts. I have a conventional mortage at 5.375 percent for 30 years and home equity at 5.25 for 15 years. If I want to combine them, I will have to put all in a home equity (3.75 for 15 years) which is great, but as I build equity and rates rise, I could only tap equity by doing a total home equity refi, probably at a much higher rate by then which would make it cost prohibitive; for me, it is once home equity, never again be able to tap it (this is not disclosed clearly), so I will have to move in 5 years. This type of restriction would never be placed on businesses! Isn't it very costly to try to refi the two loans separately?
It is true that it would be costly to refinance two mortgages separately. It is always suggested that if you've two mortgages, then you should refinance them together into a single mortgage.
i have a conventional first mortgage about 60 percent of my home value and a home equity mortgage where i got cash out for about 20 percent of the value. i would love to refinance both and understand that if i combine them i would have to refiance as a new home equity, which i can live with. my concern is that housing values have dropped and i may be just shy of 80 percent ltv. if that is the case and exceeding the 80 percent ltv would preclude a home equity cash out refinance, could i just refi the first mortgage for a new term and rate (possibly paying mortgage insurance for two or three years until i recover to 80 percent ltv and keep the old home equity loan; and if i did refi only the first mortgaage, could i borrow the closing cost for the first mortgage refi. i suppose another option may be to borrow $10,000 from my 401k and leave it in the bank a month before i apply to refinance both loans (and could later choose to decide to use it to cover any shortage if needed, allowing me to refinance both loans at today's historically low rates, pay the closing costs, and avoid mortgage insurance.