You may not realize it, but we actually have some of the most conservative equity laws in the country down here in Texas. They limit the maximum loan-to-value of your financing to 80% of the home’s value. Regardless of the financing you are doing, the state requires an appraisal to be conducted to determine its value to make sure it doesn’t exceed the 80% threshold.
There are a few different types of equity loans out there. Here’s a little bit of information about each.
Equity lines of credit are variable and can be used for practically anything. Standalone second liens are typically taken out for home improvements. Cash-out refinances are when you refinance your entire loan balance in excess of what you want to borrow to get cash out of the property.
There are advantages and disadvantages to each, but one thing about these loans is universal in Texas. Whenever you take one out, there is a 12-month cooling off period until you can touch it. If you did a cash-out refinance and rates cratered immediately after, you are prevented from refinancing again until after the period has passed.
Also, keep in mind that in Texas, you are only allowed one equity loan on a property at a time. If you did a cash-out refinance, for example, you are not allowed to take a home equity LOC out after the fact.
If you have any questions for me or would like to discuss your specific scenario, don’t hesitate to give us a call or send us an email. We look forward to hearing from you.