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Texas Cash Out

Refinance Loans

Texas Cash Out Refinance

Texas cash-out refi rules are a little different than in other states, but they’re not as strict as they used to be. As long as you have a good credit score and more than 20% equity in your home, you are eligible to refinance your mortgage and pull cash out from your home. And with Texas home equity levels rising, many Texans can easily meet said requirements.

A Texas Cash Out is also called a Section 50(a)(6) loan, which means you can refi your current mortgage while also tapping into your home’s current equity. This equity is converted to cash paid to you at closing after your refinance. 

You can use a cash out refinance to:

  • Consolidate credit card debt or personal loans
  • Pay for renovations or home improvements
  • Make a down payment on an investment property
  • Make a down payment on a 2nd home 

It’s up to you on you spend the money, but it’s best to use your funds on long-term needs instead of short-term expenses. You have to consider that accessing funds means you will pay back the money, with interest over the life of the new home loan. 

Texas Cash Out Refinance

A few Cash Out Rules to know about:

  • Limited closing costs — Closing costs charged by your lender cannot exceed 2% of your loan amount. This does not apply to third-party closing costs like attorney fees, appraisal fees, and title insurance fees. 
  • 80% Max LTV (Loan to Value)— Your new loan amount cannot exceed 80 percent of your home’s value. That means you must leave 20 percent equity untouched when cashing out. For example, if the value of your home is $400,000, you could borrow up to $320,000. 
  • Second mortgages (and all liens) must be paid off — If you already home equity line of credit (HELOC) or home equity loan, your new cash-out refinance will have to pay off these loans first.
  • 6 Month waiting period — You’re eligible for a cash-out refinance in Texas only when you’ve had your existing mortgage at least six (6) months. Also, you are not eligible for a new cash out unless it’s been 12 months since your last refinance. 
  • Must wait 7 years after a foreclosure, bankruptcy or short sale- Before you can qualify for a Texas  cash-out refinance.
  • FHA, VA and USDA- loans are not permitted under Section 50(a)(6) rules
  • Texas cash-out rules only apply to your primary residence-  This means your investment or second homes are not bound to these rules.

Texas Cash Out Refinance

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