Texas Mortgage & Refinance Loans

Texas cash-out refinance and home equity loans (Section 50(a)(6))

Texas has stricter home equity rules than any other state. They apply whenever you take cash out of your homestead, through a cash-out refinance or a home equity loan.

• Your new loan plus all other debt on the home generally can't exceed 80% of its fair market value.
• There is a waiting period: the loan can't close until at least 12 days after you apply and receive the required Texas home equity notice.
• You get the final itemized disclosure at least one business day before closing, and a 3-day right to cancel after closing.
• Certain lender fees are capped at 2% of the loan amount.
• The loan must close at the permanent office of a lender, attorney or title company.
• Generally only one Texas home equity loan is allowed every 12 months, and a married borrower's spouse must consent.
• These loans are non-recourse: in most cases the lender can look only to the home, not your other assets, for repayment.

Texas HELOCs (Section 50(t))

A Texas home equity line of credit follows similar protections: combined loans on the home generally can't exceed 80% of its value, and each advance must be at least $4,000.

Refinancing a Texas home equity loan into a regular mortgage (Section 50(f)(2))

If your current loan is a Texas home equity loan, you may be able to refinance it into a regular (non-home-equity) mortgage once the requirements are met, including a waiting period after the original loan and an 80% loan-to-value limit. A rate-and-term refinance with no cash out generally avoids the 50(a)(6) rules.

Property taxes, homestead exemptions and escrow

Texas has no state income tax and no state property tax, but local taxes set by counties, cities, school districts and special districts are among the higher rates in the country. Most lenders collect property taxes and homeowners insurance monthly in an escrow account.

• File for the homestead exemption with your county appraisal district after you move in; it lowers your taxable value.
• Additional exemptions are available for homeowners 65 or older, homeowners with disabilities and disabled veterans.
• You can protest your appraised value each year with the appraisal district.

Title insurance and closing

Title insurance premiums in Texas are set by the Texas Department of Insurance, so the base premium is the same at every title company. Closings usually take place at a title company.

Community property

Texas is a community property state. If you're married, your spouse will generally need to sign certain documents for a loan on your homestead, even if they aren't on the loan.

Licensing and consumer protection

Mortgage companies and residential mortgage loan originators in Texas are regulated by the Texas Department of Savings and Mortgage Lending (SML). You can look up any company or loan officer on NMLS Consumer Access.