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 worth 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
we do 100% purchases. we used to do a few 103% purchases for closing costs... when we couldnt get seller concessions.
100% is still strong.
thanks for stopping by
You are right Big Brother is watching. If I were working in Texas as a mortgage broker I would be lobbying to get the cash out law changed.
Its bad for the economy and bad for a mortgage broker's income.
BLOG ON!
I was not aware of that. Thanks for the post. That could have caused me a problem in the future. Now I know and Knowledge is Power.
Tom,
I see your point on the downside of not being able to access your money. I'm also watching the effects of what it does to people who use it all up, like a "drunken sailor" and now the poop is hitting the fan, so to speak. It's sad, sad, sad. I had a client try to sell me her grandfather clock and anything else that wasn't wired to the house.
Fran
Thanks for stopping by folks.
Yes, it is sad that some people aren't responsible enough to manage their money. and even sadder that the rest of us have to live with their mistakes
Very interesting information....but I agree there is good and bad to this!
Thanks Kim.
It happens a lot that people move in from other states and plop down some money on a home thinking that they can get a heloc later if they need some cash..... and the bank says: NO!!!
sound like a good thing
at the same time i think i would be annoyed if the equity in my house copuld help me and i wasnt allowed to use it
Kevin, you cannot take cashout above 80%. Unless you are not taking real cash in hand and are just rolling in past property taxes.
You cannot take cash out period whith an FHA loan in Texas.
Sorry.
Does this answer all of your question?
Does anyone know if ANYONE will refinance a manufacuted home in TX in this scenario? They have taken cash out of the property before, but we are doing a rate/term refi now (I know, in Texas it's still condidered cash-out). At thios point I am trying to find anything that will help these people.
Thanks,
Greg