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.
P.C. , If you value had dropped and the LTV would exceed 80%, YES, you can refinance just the first mortgage and roll your closing costs into the loan, as long as the LTV does not exceed 80% (new 1st mtg to value) and the CLTV (new 1st & existing 2nd mtg) does not exceed 90%. As long as your LTV is <=80%, you would not have mortgage insurance, even if the CLTV is <=90%.
"Texas (a)(6) loans are cubject to the following restirctions: The (a)(6) may not be used to acquire the property or to finance construction.
What property is "the property" referring to? The subject property or other?
What property is "the property" referring to? The subject property or other?
A bank is declining my loan, I am a widower, because I want to use the funds from the loan to build another smaller home. Nothing else is affecting the approval. Credit is very good, loan to value is 60% and ratios are excellent. It is going to take about a year for us to build a second smaller home. In the meantime, I will still be living in the home which will be put up for sale. The Banks contention is that there is a risk of us not selling the current primary residence before I complete the new residence and in their eyes they believe I would not have two homesteads. I don't understand. The Central Appraisal District states that I can only have one homestead in the state of Texas and why can't I have two properties. Can someone shed light on this.
A bank is declining my loan, I am a widower, because I want to use the funds from the loan to build another smaller home. Nothing else is affecting the approval. Credit is very good, loan to value is 60% and ratios are excellent. It is going to take about a year for us to build a second smaller home. In the meantime, I will still be living in the home which will be put up for sale. The Banks contention is that there is a risk of us not selling the current primary residence before I complete the new residence and in their eyes they believe I would not have two homesteads. I don't understand. The Central Appraisal District states that I can only have one homestead in the state of Texas and why can't I have two properties. Can someone shed light on this.
Where is it posted that you can not use the funds from an cashout refi to build another home?
Moises,
There is no provision preventing you from using the funds to purchase another home.
There could be another underlying issue..... Like projected debt ratios after the tax man comes around or something.
The smaller home would be a 'second' home until the current property is sold and then you could add homestead to the newer home.
There is no provision preventing you from using the funds to purchase another home.
There could be another underlying issue..... Like projected debt ratios after the tax man comes around or something.
The smaller home would be a 'second' home until the current property is sold and then you could add homestead to the newer home.
we have an investment property that was owned free and clear by 3 family members. my wife and i got a loan (we just found out was classified as this texas a6 loan) to buy out the other family members. we now want to refinance that loan to get better terms. i have been told that this loan cannot be refinanced because it is an a6 loan. this does not make sense. it was considered "cash out" the first time because we had topay off the other parties. we are not asking for cash out this time. we just want to refi for better terms.
any ideas or advice?
any ideas or advice?
Hi Guest,
As far as I know, a Texas A6 loan cannot be refinanced within the first 12 months. After that, you can refinance the loan. You can contact the local lenders in order to find out whether or not they can help you with a loan. To know more on this issue, check out the given page:
http://www.mortgagefit.com/texas/a6loan-law.html#23849
As far as I know, a Texas A6 loan cannot be refinanced within the first 12 months. After that, you can refinance the loan. You can contact the local lenders in order to find out whether or not they can help you with a loan. To know more on this issue, check out the given page:
http://www.mortgagefit.com/texas/a6loan-law.html#23849
we have had this loan for over 2 yrs and both B of A and InterBank Lending said they could not do it. our credit is excellent so i am still confused. they said they could not do it becauseit is a Texas A6 loan. is it because this is not my primary residence? it is a rental property.
As it's a rental property, things could be different and the lender may not grant you the loan.
I just heard the minimum to borrow on a cash out in Texas is $130,000?
Any one know if this is correct?
Any one know if this is correct?
As far as I know, the minimum loan amount is $1,30,000 and the maximum LTV should be 80%.
We refiance our home in state of texas about 3 years ago, I would like refiance to bring down our mortgage payment. But I been told due A6 law in the state of Texas that I'm not eligible for refiance until a built more equity for equity )right now our ltv is about 80% and I need to be at 87% or more of my ltv. Could somebody look at this situation and let me know. Thanks, Pete Graham
[Email address deleted as per forum rules. Thanks.]
[Email address deleted as per forum rules. Thanks.]
It will be better if you could contact a Texas based attorney and take his opinion regarding Texas A6 law. He will better guide you in this regard.
In tears at this moment, bewildered at my mortgage company, ASC, who told my husband that we had qualified for the HAMP program. We waited and waited for papers but nothing. I tried contacting our case worker to no avail for the last month. Then today I talked with a fellow who informed me that we have been denied for the HAMP program because we have a Texas cash out loan. Foreclosure date is March 6th. I did'nt even know what that was til I looked on the internet and found this site. Would'nt we know if we had this type of loan? We've never taken money out against the house. Could we have done this without realizing it? Any advice would be so helpful and appreciated. thanks Julie