Refi with Cash Out

jays2000

Senior Member
#2
If the cash out is against principle you have already built up, then I don't see why it would be a bad idea to take out an extra 10-20k to pay off balances carrying a much higher interest rate.
 
#3
I did it and there are some important things you need to know. I was told it is Texas law that this is a one time only thing. You can never get cash out again. You can never get a HELOC and you know those refi things you get in the mail that say refi with no closing costs? You won't qualify for those either. I'm sure someone will explain the reasons why for this, I don't know what the law is called. Even with all this, I still got the cash out and don't regret it.
 

TPW

Diamond Member
#4
I would do a cash out re-fi for home upgrades only. That way the value you take out is put back into the asset and can be recouped at a time in the future when/if you sell the home. JMHO
 
#5
We were told we weren't allowed to do that - or I guess we could but it was going to change all the terms on our full loan, we couldn't keep our rate and all our loan terms the same and pull out extra cash.
 
#8
Hello, I'm a Sr. Mortgage Loan Officer.

Texas does allow you to take cash out multiple times. The stipulations with TX A6 laws are

1. You can't borrow over 80% of the value of the home (lenders won't let you do this anyway for cashout)

2. Any future refinance of that cashout loan will be considered cashout (tighter guidelines). (not a big deal, in my opinion).
 

Rooster

Silver Member
#10
Also, the rate on a cash out is higher than a normal rate. I believe it's about a quarter point. Your home will always be considered a cash out after that, and any refi you have will always have the extra interest rate premium.
 
#11
I did it and there are some important things you need to know. I was told it is Texas law that this is a one time only thing. You can never get cash out again. You can never get a HELOC and you know those refi things you get in the mail that say refi with no closing costs? You won't qualify for those either. I'm sure someone will explain the reasons why for this, I don't know what the law is called. Even with all this, I still got the cash out and don't regret it.
They got a few things mixed up when they told you the cash out details.

- Cash outs are limited to 80% of your homes value.
- The rate tends to be around .25% more than a standards rate and term refi
- Title fees are about $400 more than a standard loan set by the State
- You can then only do a loan after 12 months and can't have a Heloc after as both are a equity out style loan


As to if you should do the loan - it is a personal and financial choice for you. Are the % rates on the card high where having those debts included in your lower mortgage rate better overall rate of return?

Just run the numbers and review


"The mortgage lender told you what? You need www.FriscoMortgageGuy.com
 

Golfer Girl

Triple Platinum
#12
This is a bad idea. Never convert an unsecured loan (credit card debt) to a secured loan (mortgage). Pay it down yourself. Stop using the cards. Do whatever you have to but don't covert.
 

Joe

Gold Member
#14
I actually just wrote about this last week on the Texas Fishing Forum. The TFF is a site much like this one, dedicated to avid fisherman across Texas. I have been a member there for quite some time.

If you are interested in what I wrote, you can click on the link below.

http://texasfishingforum.com/forums...80/Debt_Consolidation_Through_Ref#Post9326280
No offense but this is the exactly what caused the housing crash in California and other areas. The problem is most people turn around and go buy a new car or a boat with this "extra" money. Then they rack up credit cards again. All this does is addresses the symptom not the problem.

If someone did this once and never ran up credit cards again that's one thing but that rarely happens in real life.
 

mikel

Platinum Member
#15
The every-12 month limit on future refis is 'forever', as well as the .25 rate penalty.

It can make sense from a total cost perspective, you have to be honest and destroy those credit cards.
 
#16
Joe, no offense taken. You are right. If you run up debt again, you will have defeated the purpose. That said, as you said, if you manage things correctly after the refi, it can be a great way to get out of high interest debt quickly, that would have otherwise lingered and hung over you for years. Lots of people get into debt young trying to "establish" themselves and get to where they are today, and then spend years paying it all back. This is simply a good option for some, to get out of it right now, at a very good rate. But again, if you run that debt right back up, that's on you...or them. You know what I mean....

Also, the California housing crash was indeed in large part to loans like cash out refi's, as well as negative amortization loans, that allowed people to buy those ultra expensive houses on a common man's salary. Texas though, does not allow cash out over 80% loan to value, where California, and really the rest of the county, allows up to 95% loan to value. Also, there are no more negative amortization loans anymore..

So, where a cash out refi may not be for everybody for the reasons discussed above, for some, it can be a true blessing and a game changer, and it certainly won't be the cause for a housing crash in Texas. That 80% rule assures us of that.

Good discussion. Glad to be apart of it.
 
#17
Ryan - just offering a suggestion here - not sure how the other forum works but I read your post and would be carful sharing that much personal information about a client or a transaction -

Just my thoughts - some things should stay in the loan file for our information only.

Geoffrey


"The mortgage lender said what?" You need www.FriscoMortgageGuy.com
 
#18
Thanks, Geoffrey. I understand where you are coming from. That's the reason I didn't give any personal info. Just some surface numbers to show those interested what might be available.

By the way, I believe you and my owner go to church together. It's good to "informally" meet you. He had nothing but good things to say about you. He mentioned you were kind of the go to guy on FOL for mortgages when we decided to become a sponsor.
 

Comeby!

Bronze Member
#19
Isnt this how everyone in Frisco finances their pools? I was saving up to pay it outright then was told that many use this method. I never thought about financing a pool.
 
#20
Not sure about that, Comeby! I have done cash out deals in Texas where I know that was the intent of the borrower, but going off of memory, honestly it seems in most cases it's been for debt consolidation, to send kids to college, or to do some kind of home upgrade.