Posted by Garrison on January 19, 2001 at 13:30:59:
What a great and detailed answer. I will call your referrals today. I am selling an extra computer and some warehoused furniture at auctions. I am thankful for your information and will follow-up on it and report to you how it went.
How to get >80% equity loan in Texas? - Posted by Garrison
Posted by Garrison on January 18, 2001 at 13:23:55:
I am buying a home, that I live in, that will appraise for ~$200,000. It is in Texas, and the home equity law only provides for a home equity loan of 80% of the appraised value. My loan balance is $157,101 (bought 19 months ago for $168,000). You can easily see that a loan would amount to practically nothing once it closed. I need $75,000 for debt consolidation, living expenses and seed capital for rehabs (if I need it) for an emergency. Any ideas out there about how I can get a second mortgage with this tiny equity in my own house. Even out-of-state lenders say they can’t go more than the 80% because the house is in the state of Texas. I need someone very creative to help me on this one. I will make good money on rehabs as a new REI when I retail it several months from now, but I need a way to take the vise off of my personal debt service of about $1050/ month down to a payment of $500/ month for 30 years @ ~7%. Any help? Thank you in advance…
Posted by JGoodsen on January 18, 2001 at 23:58:16:
Put the property into a land trust. Go to a private money source, or maybe someone that wants a nice return on a secured investment out of their IRA. Borrow the money using your beneficial interest in the property or maybe a portion of it as collateral. Further secure the lender with a UCC-1 filing against the interest. If you were to default they can seize the asset, the beneficiary interest, and don’t need to go through full foreclosure proceedings so there is an advantage for the lender as well.
Not necessarily conventional, but might just be the way around this restriction in the Republic of Texas. They aren’t truly making a home equity loan on a tangible asset, but rather a personal loan secured with something intangible like a stock.
I don’t see where it’s easy at all. Add it all up and you need a 100% loan it would appear. Although not sure what you’ve posted. You’re buying a home, and then you say you have lived in the home for 19 mos.???(Don’t move out and try to do anything, it only gets harder on a nonowner occupied.)
IF this all the same house, it looks like you need a 100% refinance (or close to it), and they may pay off your other debt but don’t think they’ll let you walk away with cash out. There’s a reason. It puts them in a very risky position. They figure if you already need help with debt relief and you are increasing the LTV substantially, then they aren’t going to give you walking around money besides, just too risky.
Re: How to get >80% equity loan in Texas? - Posted by mike-tx
Posted by mike-tx on January 18, 2001 at 17:57:19:
It is my understanding that the 80% LTV restriction applies only to your homestead, ie, the place where you actually live. Non owner occupied property(investment) has no LTV restriction. You could move to an apartment and rent out your house, then you could then try to get a NOO loan at 90% or so.
Re: How to get >80% equity loan in Texas? - Posted by Garrison
Posted by Garrison on January 18, 2001 at 21:32:57:
In the first sentence I said that I am living in the house that I am buying. In other words, I own it, but I have a mortgage. The state of Texas has a law that only allows you to borrow 80% of the value, which in my case would equal $160,000. Eighty percent of $200,000 is $160,000. If my loan balance is $157,101, then the difference between $160,000 and $157,101 is $2,899. That is all they will let me borrow. My mortgage is at 7.25%. The lowest I could get with a refi and cash out would be in the range of 6 7/8%; not enough of a difference to go through the trouble. Any ideas?
Posted by TRandle on January 18, 2001 at 19:16:15:
Unless things have recently changed, the maximum for a cashout is 80% here. True, you can go to 90% occasionally if you happen to know when the sporadic programs pop up, but it’s rare. I’ve only done it once and that was two days after purchase.
Posted by TRandle on January 18, 2001 at 23:36:18:
I can’t think of any way to obtain 75k from one source from what you’ve told me. So, my suggestion is to break it down into smaller pieces and solve each independently. If the first breakout isn’t small enough, go smaller.
You could use credit cards or hard money for your rehabs and/or living expenses. I don’t know how much that knocks off your figures.
Find a private investor willing to go to a higher LTV for a second on your house. Contact Troy Martin or Bobby Fischer at First Equity (512-346-8892) to see if they have any products that would help. They specialize in 2nds and funds for a program may come and go in a week or two. I doubt mentioning my name (Tim Randle) will help any, but they might remember me.
You could sell something and/or get a temporary part-time job. It’s hard to get a feel for your situation based on what you posted. If you haven’t read Financial Peace by Dave Ramsey, I recommend it. You could postpone the rehabs and wholesale some properties or assign some L/O’s for extra cash. Hope that is enough ideas to get your thinking moving in the right direction. Take care…