A Closer Look at Texas Cash Out Mortgage Laws

When Texas homeowners need access to cash, taking out a home equity loan is an option. Understanding Texas cash out mortgage laws can be tricky, but the good news is most complications are from the regulatory system, designed to protect consumers like you.

But you do not need to know the ins and outs of the law to borrow. All you reallyneed to understand are the most importantrestrictions.

Can I take cash out of my home anytime I want?

If you are taking out your first home equity loan, then there is no time restriction. However, money owed could be a concern; borrowers cannot owe more than 80 percent of their home’s market value between their mortgage and their home equity loan.

If you have had a home equity loan in the past, then Texas law may force you to wait a while to take out a new one. Borrowers are only allowed to take out one home equity loan per year and cannot obtain a secondary loan unless the primaryloan has already been paid off.

Does the law only address my primary residence?

Yes, the regulations of cash out equity loans in the Texas Constitution only address your primary residence. While second homes and investment properties are not governed by the same rules, lenders can choose to apply these rules to any property as part of their company policy.

Can I refinance my mortgage after I have taken out a home equity loan?

If 12 months have passed since the day you took out your original home equity loan, you can refinance your home. Thisoncewas not the case, but the Texas Constitution was amendedon January 1, 2018,to allow for refinancing using a conventional loan even if a cashout loanwas once used.

How long does it take to qualify for a home equity loan in Texas?

A lender can determine if you are qualified for a home equity loan in Texas in a matter of minutes. However, getting the loan takes more time. The minimum amount of time needed is 12 days between the application for the loan plus the receiptof the official notice of borrowers’ rights and the loanpaying out. More typical is for the process to take 30 days or more.

Where do I need to go to close a cash out loan in Texas?

To close a cash out loan in Texas, the borrowerhas to be present at the closing, which must take place at the permanent office of either the lender, title company, or attorney.

Come see one of our mortgage professionals today to discuss your cash out mortgage loan options.

Recovery Notice

Figure: 7 TAC §80.200(b)
“CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A COMPANY OR A
RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A
COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE
LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT
FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S
WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS
AVAILABLE AT 1-877-276-5550.
THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF
CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS
CAUSED BY ACTS OF LICENSED RESIDENTIAL MORTGAGE LOAN ORIGINATORS. A
WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND
MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE
PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND,
PLEASE CONSULT THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV.”