Refinancing in TX; Is it more challenging?

[Khaled Seirafi]

Hi all. I was just speaking to a loan officer here in CA about the idea of investing in TX. He mentioned that it's unusually difficult to "pull money out" of an investment property (I believe he meant to refinance) in TX. Can anyone give me an idea if that's in any way accurate?

[Andrew Postell]

@Khaled Seirafi Texas does have some "different" rules to taking a cash out loan on your PRIMARY HOME...and some lenders are so nervous about these rules that they just don't even want to fool with doing ANY cash out loans in Texas but local lenders can all help with this.  I would certainly caution though that while it's possible there could still be differences in lenders.  With investment property lending I always suggest asking a series of questions to your potential candidates to make sure they can do all the things that we as investors need.  

Questions for Lenders

1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
2. When do you start using “After Repair Value” on my property?
3. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
4. What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
5. How many loans can I have with you?
6. Can I change title to my LLC?
7. Do you sell your mortgages?
8. What is your loan minimum?
9. Can you explain to me what your reserve requirements are?

Now, what does this have with taking cash out?  Maybe you jut bought the property and fixed it up...then you want to make sure your lender will give you the full AFTER REPAIR VALUE so you can get your cash back.  There are lots of reasons to ensure your lender is flexible and providing you the best loan possible.

You can also read this post HERE about properly structuring a CASH PURCHASE...no matter what state you are in. 

Hope all of this helps!