Texas Cash Out Mortgage Loans
I still get the occasional call from someone wanting to cash out their mortgage to consolidate bills and they have little or no equity.
Texas is unique in that they do not allow a homeowner to access their home’s equity above 80% of the appraised value. That’s right, Big Brother is watching out for you. If you owe more than $80,000 on a home that appraises for $100,000 you cannot tap into that equity to use as you see fit. This rules applies for Owner Occupied, Homestead properties. Non Owner Occupied(investment) properties are exempt.
While I disagree with the law, I do understand it…. and maybe Texas was wise to put this into place. Bryan Tutas wrote a fantastic article on this subject. Your home is your castle, not an ATM machine! With Real Estate coming back down to reality in recent months, many people are upside down on their homes because they cashed them out at the height of the market. Like drunken sailors, they took all of the cash out and bought fancy cars and big screen TVs with the ‘found money’. Some of them don’t have enough cash to pay the realtor fees when it is time to sell.
But let’s look at this: If I owe $300,000 on a property woth a solid $400,000….. I cannot acces that $100,000 to pay off medical bills or put my kids through college. This is where it hurts people. This is where Big Brother gets in between me and my money. If I want to borrow that $100,000 at mortgage rates, which is pretty cheap money, to invest elsewhere…. the State says I cannot.
Regardless, there are still homeowners out there with plenty of equity should they need some emergency cash. I just hope they spend it wisely.
Tom Burris
DallasLoanGuy.com
Texas Home Loans