Texas equity loans

I have equity lines in CA and AZ with Bank of America and just called to secure another one for a Texas rental.

For whatever reasons, they don’t do them there.

I paid 179k for this Austin house last August. It appraised at 184.

Not sure about the current comps.

My loan is 135 and last time I checked my credit score was 767.
I go stated, verified assets.

Should I first contact Countrywide about their program or shop mortgage brokers for the best rate?

Is it better to go fixed before interest rates go up again?

Any suggestions welcomed.

Just to confirm, you purchase “last August” which would have been 2004. If so, then there will be no seasoning issue. If 2005, then you will be restricted to certain lenders. Even beyon just being limited because the property is in TX. Texas has cash out restrictions and limits certain types of loans.

90% is possible.

Selecting a fixed rate would be better if planning to have this loan long term. Bernanke and the Feds raised the prime agin Tuesday. Now 7.25%

It was 2005 so I would be looking at 90%.

I secured 2 lines @ prime + 1 in AZ that I haven’t dipped into yet. Do you think it’s better to fix those now or close them out and open up elsewhere for a better rate?
I bought those in 2004.

I plan to pay off my equity lines within 1-2 years once I use them except for my home line that I luckily fixed @ 6.75 two weeks ago.

What is considered long term?

I cant pinpoint what you should do without having all the back ground.

In general, prime + 1 is not to bad for investments, depends on the ltv.

Figure if prime raises another 1.25% over the next year you’d be at 9.5%. When considering switching to a fixes second, you’ll need to know the cost. Some helocs let you lock in portions that you have used. If the loans are lower amounts then the difference in interest may not be worth paying the closing costs. Some of your local banks can do low cost 2nds (not sure about investments though)

Some lenders have no seasoning for 2nds but generally not helocs unless at 70% ltv (stated). You may only be able to get a fixed 2nd.


Texas has consumer protection laws that do not allow more than 80% home equity to be taken out, but it looks like you exceed this amount since your loan was only 135k. The lender can use tax assessed value or their own appraisal to determine market price.

Some lenders may require/prefer that you have a homestead exemption in place and you must occupy the property. This was the case when I took equity out of one of my investment properties using Velocity Credit Union. You should speak with a Texas mortgage broker who can better explain why you aren’t “qualifying” for an equity loan.


Actually, she could speak to any mortgage broker that knows investment loans.

90% cash out is ok for your investments.

She can speak to any mortgage broker to get general advice, but if she’d like more information on the 80% rule in TX, she should speak to someone who knows the mortgage rules of this state.

From the second link:

"How much can I borrow?
Through home equity loans, Texans can borrow money using up to 80% of the value of their homes as collateral. Consider the example of a home valued at $100,000 with an outstanding mortgage debt of $30,000 and $70,000 worth of equity. Because homeowners are limited to borrowing no more than 80% of the home’s value, the homeowner would simply calculate 80% of $100,000 ($80,000) and then subtract $30,000 to arrive at a maximum loan amount of $50,000.

Total mortgage debt, including the amount of any existing mortgages plus the projected home equity lien, cannot exceed 80% of the home’s current fair market value. Homeowners with 20% or less equity in their homes are not eligible for home equity loans."

"Why can’t I borrow against more than 80% of the home’s value?
Texans voted to limit the loan amount to 80% to help prevent overextensions of credit and protect our economy during times of economic slowdown. "

Thanks for your replies. Now I’m a bit confused.

>>You should speak with a Texas mortgage broker who can better explain why you aren’t “qualifying” for an equity loan.<<

I have not been denied anything because I have not started the process yet.

I was just wondering if it’s better to first contact Countrywide about their line of credit program for this TX rental.
I did not pay any costs on the SD and AZ lines from my bank.

These are the numbers for my AZ rentals that I bought in August 04.
I am not sure what they actually appraised at:
Sales price: 183k 180k
loan 149 147
lines of credit 84k 75k

Let’s say that this TX rental appraises at 185 and the loan is 135.
How much of an equity line would I be entitled to according to TX law?
Must I go through a TX lender?
I am mainly interested in just having the line available should I need it.

Listen ladys,

I want to make this clear. The 80% homestead applies to OWNER OCCUPIED properties.

Just to double check myself, I’ve confirmed with my lenders.

Not all lenders will allow 90% though.

Investing Lady,

The lenders that will go to 90% do not have helocs. Only fixed 2nds.

Helocs for investment properties to about 80%

He is correct and cleared it up nicely. HELOCs are a different product than just taking equity out. There are various ways you can take equity out of a home without it being a HELOC.

I thought you were told you weren’t able to get a HELOC in Texas since you said “for whatever reason, they don’t do them there”. My suggestion was just to speak to the knowledgeable lender to find out why.

We both agree that you can meet your goal of taking out equity. You just need to talk to the right lender. Give Countrywide or any other lender that you trust a call to see what they say.

They don’t do them in Texas to protect retail customers. It takes a tool out of the investor’s tool box, but it saves aunt Judy from getting in trouble.