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Community First National Bank - McAllen, TX
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Texas Home Equity Loans

Home Equity Loans

How much equity do I need to get a Texas Cash Out Loan?

A borrower can take equity out of their home in Texas as long as they leave 20% equity in their home when they obtain a Cash Out Loan. By way of example, if you have 50% equity in your home you can borrow 30% of the equity but must leave 20% equity in your home. This is a unique law in Texas and is intended to protect home owners from taking out too much equity from their home.

Example: If your home is worth $300,000 and you have $150,000 in equity, you can borrow (or "take cash out in the amount of") $90,000, which leaves $60,000 (or 20% of the home's value) in equity.

How often can I take cash out of my home?

You are legally permitted to obtain a Texas Cash Out Home Equity Loan one time per year, but 20% equity must always remain

Does this rule only apply to my primary residence?

Yes, the Texas Constitution only regulates cash out home equity loans on your primary residence. These rules do not apply to 2nd homes or investment property. (Note that lenders may opt to set similar policies regarding 2nd homes and investment properties, but this is not required by law.

Can I refinance my home after I received a Texas Cash Out Home Equity Loan?

Yes, you can refinance your home even if you previously received a Texas Cash Out loan. The only caveat is that you need to wait 12 months from the date of your original cash out loan. The Texas Constitution was changed as of January 1, 2018 to remove the "Once Texas Equity Loan always a Texas Equity Loan" law that mandated that you had to refinance using the same type of Texas Cash Out loan product for every subsequent refinance (even if you did not take out cash the 2nd time). Now you can use a normal rate and term conventional loan on a subsequent refinance as long as you don't take out cash with that loan.

Can I take out a home equity line of credit (2nd lien) if I already took out a Texas Cash Out Loan in the past?

No, you can only have one Texas Home Equity loan in place on your home. That said, if you took out a Texas Cash Out loan in the past and want to borrow more from your property you can do this by refinancing your current first lien into a new Texas Cash Out Home Equity loan.

How quickly can I get a Texas Cash Out loan?

The full process to get a Cash Out loan is approximately 30-45 days. Under the Texas Law, as part of the process, you need to sign a letter that explains how a Texas Cash Out loan works and wait a minimum of 12 days from when the loan application process starts until when the loan closes (this is known as a "12-day letter").

Where do I have to close a Texas Cash Out loan?

Texas cash out loans need to be closed at a title company or lender office (mobile closing services are not permitted for Cash Out Home Equity Loans).
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