Texas Constitution Section 50(a)(6) Home Equity Mortgage Eligibility. There is a lot of confusion about how Cash Out Home Equity Loans work in Texas.
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According to A6 law in Texas, a cash out refinance cannot be done if the total value of the loan to be provided is greater than 80% of the property value. So you need to consult with a lender and find out the value of the loan when combined together. If it is not exceeding 80% of the value, then you can very well qualify for the refinance.
Texas homeowners have a few different options when it comes to refinancing an existing home loan. Through the Federal National Mortgage Association,
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Texas Section 50a6 Loans: – Mortgagefit – For a cash out refinance in Texas as per the law which is known as A6 law a cash out refinance cannot be more than 80% ltv. So you need to check if the combined value of both these loans is exceeding 80% ltv or not.
No seasoning requirement for first or second mortgages that are not Texas Section 50(a)(6) loans. If an existing Texas Section 50(a)(6) second lien is being subordinated and there is no cash-out from the first mortgage refinance, refer to the fannie mae conforming fixed Rate Product Description and the Fannie Mae
Texas 50 (a)(6) Loans Originating on a Wholesale Basis Closed in. texas home equity loan/heloc Closing Instructions Addendum .
Special aspects of Home Equity Loans in Texas. The Texas legislature has passed laws that are designed to protect homeowners and their families, and the state did not even allow home equity loans until 1997. Since that time, state laws have been amended to allow for home equity loans, but the laws include strong protections for consumers.
In the state of Texas once you have completed a cash-out or home equity loan on your homestead or primary residence the maximum loan-to-value (LTV) allowed thereafter is 80%. This restrictive ruling is actually part of the Texas Constitution (see section 50 (a) (6) article XVI).
· A joint resolution has passed both houses of the Texas Legislature to amend texas’ home equity law. Because Texas’ Home Equity law is contained in the Texas Constitution, any proposed changes must be implemented through Constitutional amendments approved by Texas’ voters.