Cash on Closing in Texas

Is it true that it’s against the law in Texas to get cash on closing through a conventional loan? I was trying to refinance my house and the broker told me that we texans cannot take cash out. It would suck if it is true for an investment property as well.

Another question: On an investment property, can I pay mortage and property tax seperately? The reason is that I want to pay the tax in the end of the year - better cash flow. Also do I need to get mortage insurance if the down payment is less than 20%?

6 one way half dozen the other! as far as taxes it is kind of nice not having to pay one huge clump at the end of the year! Plus it is the same price either way!

As far as texas law and cash back I do not see how it would be even remotely against the law!

I can find out though! Robb

<<The reason is that I want to pay the tax in the end of the year - better cash flow>>

Could you please explain the reasoning behind this statement? If your taxes are $500 a year, they are $500 a year whether you pay them monthly or pay them annually and, thus, your cashflow is the same either way.


The tax money can be used to make more money through private lending. Eg: for 500$ tax, if I can give a loan every three months for 1500$ upto the end of year. Given interest of 15%, that is 405$ in total. If I have 10 properties that is 4050$ extra money per year.

Maybe I’m dense, but is this explanation available in another language – English perhaps?

What has lending $6,000 got to do with paying $500 in taxes? What happens if the lendee skips town with your money? Now, you’ve got no cash and still owe the $500 in taxes…! Whether you lend other money or not, yous till owe the taxes and paying them monthly or paying them annually has ABSOLUTELY no effect on the cashflow of the subject property!

Sounds like Steve Martin’s explanation of how to get a million dollars tax free!


actually, that isn’t entirely true. “a bird in the hand is worth two in the bush”

present vs. future value of money. if you can spend the money now, it precludes you from holding it and earning a return on it. talking about 1 property and $500 isn’t a very significant difference, but if you are talking about 20 properties and $10000, it could be.

“Get a million dollars…then, don’t pay any taxes…”