Cash Outs in Texas
Cash outs in Texas- Now we’re going to move to cash out. So there’s a lot. Are Hilux available on income properties, other investment properties, I’m guessing. So this is a great I’m going to talk kind of wrap all this in for cash outs. So in Texas, you’re allowed one cash out refinance every 12 months. So you’ve heard people say every year, well, if I do one in December of twenty twenty, I can’t do one in January of 20, 21. So it’s every 12 months to a month period. You can do cash outs on your primary, typically, that’s an 80 percent LTV, Max.
So if I buy my house is worth one hundred thousand dollars, I could pull out 80 grand if I owed 50, I really only get access to about 30. OK, those are awesome. You can do cash outs on investment properties as well, or income producing properties. That’s roughly a 70 percent LTV. So you’re able to pull out a little less because the risk is a little higher on investment properties. Home equity lines of credit, so those are those are interesting as well, unlike a cash out where your client would get all that cash.
Three days after closing to do whatever they wanted with a line of credit is a similar underwrite. But they give you a line of credit. So they’re going to say, hey, we’re going to give you an eighty thousand dollar line of credit and you don’t pay anything on it until you use it.
So it’s kind of like a credit card attached to your house. It’s a great option. It’s amortized daily, which is very powerful. There’s a lot of very good YouTube videos on how to leverage hillocks to pay off your mortgage faster or to buy investment properties. I mean, you could talk about this for hours. Great resources out there on YouTube, just type in hillock strategies and a lot come up.
As Katy talked about, they are available on investment properties. You’re just not going to get the best terms as you would on a primary. As the market changes and goes through its ups and downs. There are banks that remove hillocks for investment properties. I got one on my investment property last year, so that was with Wells Fargo. So it changes daily because he locks are really based on that, said Banks. Tolerance for risk.
Great question, Katie. So cash outs are a wonderful way for your client to recoup equity. Home prices are continuing to go up. It’s the cheapest way to build a pool. They want to pull out one hundred thousand dollars to build a pool. That’s the cheapest way to do it. Typically, if they want to do some sort of remodel on their home that cost greater than ten to fifteen thousand dollars, I’d probably recommend a cash out refinance. All right. Sounds good.
On to number four. All right, what are the rates on hillocks versus home equity loan to answer that question really quick? Home equity. So cash out refinances, their rates are usually a half a percent greater than what a purchase would be or regular rate term. So if your rate term is two point five percent, your cash out is going to be three percent. Reason for that is you’re pulling equity out of the house and increases the risk for the bank.
On hillocks, they’re sometimes their fix, sometimes their variable, the rates are not as good, they’re typically one percent, maybe one and a half percent higher, the benefit of the hillock is that your interest is amortized daily and you’re only paying interest on what you borrow again.
So that’s why there’s like ten to fifteen thousand dollars or less. He locks are good because you can pay it off really quickly and not pay as much interest versus a full on 30 year amortization of a larger amount. So I wish I could answer the Hillary question better, but those change very, very frequently. They’re not regulated by Fannie Mae and Freddie Mac in the same way that conventional fixed rate mortgages are.