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We offer a complete line of Texas mortgage loans, Texas
home equity loans and Texas mortgage refinance loans for all types of borrowers
with low Texas mortgage rates.
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Tap Into Your Equity and Get Out
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HELOCs are back! HELOCs are
basically lines of credit based on the equity in your home. You can take out a
loan in the form of a HELOC or 2nd lien to raise cash, buy a pool or do some
remodeling or several other reasons and needs.
Cash-Out Refinance
A refinance transaction in which the amount of money received from the new loan
exceeds the total of the money needed to repay the existing first mortgage,
closing costs, points, and the amount required to satisfy any outstanding
subordinate mortgage liens. In other words, a refinance transaction in which the
borrower receives additional cash that can be used for any purpose.
In many cases you can include the total closing costs for a refinance
transaction within the new loan. This allows the borrower to refinance the
property with minimal out of pocket expenses.
Normally the only out of pocket expense for a refinance transaction is the
appraisal fee which is paid COD when the appraisal takes place.
Cash out sometimes hinges on the value of your property. So talk to your lender
and see what the comparable values (comps) are for your property before moving
forward.
In addition to the value of your property, you may be limited by your FICO score
and how many late payments you have made in a 12 month period as to what Loan To
Value (LTV) you can cash out to. A poor credit rating may mean a lower LTV that
you can cash out.
You can take cash out for many reasons, home improvement, debt consolidation,
vacation funds or just extra cash on hand.
Texas cash out loans have some of the strictest guidelines available. Homestead
owner-occupied properties can have an LTV no higher than 80% and the homeowner
must have a 12-day waiting period before closing.
Cash out loans frequently allow consumers to save money by paying off higher
interest rate debts with the proceeds from their refinance
Rates on cash out home loans are typically much lower than those on credit cards
and other types of consumer debt.
By taking a cash out loan to pay off credit cards or other debt, you may be able
to write off the interest on your taxes. You should talk with your tax advisor
for more specific details.
Cash-out refinance differs from a home equity loan (HELOC) in a couple of ways. A
home equity loan is a separate loan on top of your existing first mortgage. A
cash-out refinance is a replacement of your existing first mortgage. The
interest rate on a cash-out refinance may be lower than the interest rate on a
home equity loan.
Cash-out for funding an investment makes sense. Instead of remaining dormant as
equity in your home let your money work for you in an investment vehicle.
Need money for College? Refinance your home now and fund your children's
education while reaping the tax benefits.
The holidays are nearing and your short on cash. You can do a cash-out refinance
instead of using credit cards and you will enjoy a lower rate and payment.
Cash out-Refinance also considered in Debt-Consolidation or Cash in hand. Money
can be used for a future investments, College, IRA, or Retirement Account. Money
can be used to pay off current monthly debt which could lower your personal Debt
to Income. Consult a Mortgage Professional in regards to how much you should
extract from the EQUITY built into your HOME.
There is no better way than to combine all of your non-deductible debt and
turning is to all deductible. This is also a great way to free up cash for
investing.
Some types of properties will have cash out restrictions. You should check with
your lender or broker to find out what types of properties have them and what
the maximum loan-to-values (LTV) are for those properties.
Cash-out refinancing differs from a home equity loan in a couple of ways. First,
a home equity loan is a separate loan on top of your first mortgage; a cash-out
refinance is a replacement of your first mortgage. Second, the interest rate on a
cash-out refinancing is usually, but not always, lower than the interest rate on
a home equity loan.
Simply defined, cash-out refinancing is when you refinance your mortgage for
more than you owe on your existing mortgage, then pocket the difference.
Of course, the best way to tell if a cash out refinance makes sense is to
actually sit down and do the math. You can consult a refinance calculator and a
home equity loan calculator and figure out how much you will save in the long
run. Compare the total amounts you will spend in interest and fees. Contacting a
loan specialist should be able to help you figure out what makes sense for your
needs.
A cash-out refinance is the process of taking out a new mortgage at an amount
that exceeds the existing balance on the current mortgage in order to refinance
the original mortgage and receive additional cash for other uses. A cash-out
refinance will often carry a slightly higher interest rate. The higher rate is
based on studies of delinquency and default which indicate that borrowers who do
a cash-out tend to have poorer payment records than borrowers who don’t. The
theory is that borrowers who need cash are financially more vulnerable than
borrowers who don’t, and in some cases they may be more likely to fall behind on
their mortgage payment.
Note: If you are refinancing to consolidate non real estate debt, you are doing
a cash out even though you may never receive any cash directly.
The interest rate charged on the "cash out" portion may be less than the rate
charged on a credit card. Using this financial tool to pay off high interest
rate debt should be considered when consolidating loans.
When you refinance and take cash out to pay off your bills and consolidate debt,
not only do you save the trouble and expense of writing and mailing all those
different checks each month to all of your different creditors, you also can
save up to 50% or more off of your current total monthly expenses. This puts
money in your pocket each month, and can save you thousands of dollars each
year.
When a borrower finances a new mortgage, that is more then the balance on the
present mortgage, and take the cash difference for other uses.
Cash-Out Refinances allow you to use your homes equity now. Instead of waiting
till you sell the property you can use the appreciation for things that matter
now. Common uses for a Cash-Out Refinance are paying off student loans, credit
cards and cars. Some people use the money for a much needed vacation!
Most loan programs call for the borrower to have 2 to 6 months of reserves after
all closing and settlement costs of a refinance. This means if your total
monthly payment (PITI) was $2500, you would be required to have verifiable and
often seasoned money in liquid assets of $5,000 to $15,000. Fortunately, some
lenders actually allow the borrower to count the "cash in hand" or residual cash
received outside of settlement to count for this requirement. Thus, if you were
getting $20,000 cash out net after all other expenses and pay-offs, your reserve
requirement would be met without verifying personal liquid assets.
Most borrowers expect their payment to go up with a cash-out refinance, but you
may actually be able to lower your payment AND take cash out. Your interest
rate, LTV ratio, and cash out amount will all come into play.
Your home is one of the quickest growing investments. You can cash out in some
cases up to a 106% of the house value depending on several different factors. A
lot of borrowers use the cash out for home improvements, pay off high interest
credit cards or personal loans, pay for school, personal use, etc.
In Texas, once a cash out, always a cash out. That means any more refinances
down the line will have to conform to Texas cash out rules until the homeowner
sells the home.
Pay off those high-interest rate, non-tax deductible credit card bills now with
a cash-out refinance or a home equity line of credit (HELOC). Contact your
trusted local mortgage lender today!
States and Lenders both have there own ideas on what is cash out and what's not.
It's best to find a good broker to work with that is knowledgeable with both
state and lender guidelines.
When you default on most personal debts, you cannot be forced to sell your home
in most cases, whereas defaulting on a mortgage loan can end in a foreclosure.
When doing a Cash Out Refinance to consolidate credit card debts, keep in mind
that you are turning non-secure debts into a lien on your home.
Another popular use of the cash out refinance is to buy investment property.
Sometimes first time investors will do this to get equity out of their primary
residence for their first purchase and then snowball it using the same type of
cash out loan to keep acquiring property.
Often investors use a product called a "no seasoning" home equity line.
They regularly use this to reap the equity from a property bought below market
generally to reinvest in a new property. What "no seasoning" means is that the
property could have been bought and closed on yesterday, and have a new loan
taken out against it today.
Cash Out mortgages usually carry a slightly higher rate but lenders will often
times allow up to 2000 dollars to be given to the borrowers at close before it
is officially considered a cash out refinance with the higher rate.
With a cash-out refinance you can usually avoid getting a higher rate as long as
you keep your LTV (Loan to Value) below 70%. So if you have a home worth 100k
and you want to try to avoid the higher rate, try to keep your new loan amount
at 70k or lower.
Depending on you credit you are not limited to 100% of the value of your home.
With good credit you can take out a loan to 125% of the value of your home.
In Texas, the cash out refinance is limited at 80% LTV for an owner occupied
property. Also, once the mortgage is refinanced as a cash out loan (Home Equity
Mortgage), the mortgage needs to be refinanced as Home Equity mortgage in future
refinancing. Once it was a cash out loan, it will forever be a cash loan until
the property is sold.
Keep in mind that you may have to pay for private mortgage insurance if you
borrow more than 80% of the value of your home even though you are refinancing
and not purchasing your home. In order to avoid this, make sure you do not
exceed the 80% mark. If you must, talk with your mortgage professional about the
ways you can avoid PMI.
Some borrowers treat their home like an ATM machine, drawing upon its equity at
every increase in value.
A cash-out refinance can be valuable when used properly. It may not be advisable
to simply spend the cash out money on vacations or material objects. Be advised
that this money is a loan that is accruing interest and must eventually be paid
back.
Vince Gutierrez
Vinni100@netzero.net
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