Your home is likely your largest asset, and over the years, you’ve built equity without thinking about it. Every mortgage payment reduces what you owe as your Lubbock property appreciates. As property values rise and mortgage balances shrink, your home quietly builds something powerful: equity. Sometimes, using that equity can make a real difference.
That’s what a cash-out refinance allows you to do. It lets you use the equity in your home to pay off high-interest debts, fund renovations, cover education expenses, or invest in new opportunities. In Texas, cash-out refinances have unique rules, and understanding them before you start can save time, money, and stress.
Let’s break down how cash-out refinances work, how they differ from rate and term refinances, and what makes Texas loans, especially the well-known “Texas (a)(6)” loans, a little different.
A cash-out refinance replaces your existing mortgage with a new one for a larger amount. The new loan pays off your current loan, and the difference comes back to you as cash at closing. It’s a way to convert the equity you’ve built in your home into money you can actually use.
People use cash-out refinances for all sorts of reasons. Some homeowners want to renovate their homes, adding a new bathroom or updating that 1980s kitchen. Others consolidate credit card debt or personal loans into their mortgage, where the interest rate is typically much lower. Some folks help their kids with college expenses or invest in a second property.
The beauty of a cash-out refinance is that you’re borrowing against an asset you already own, usually at a much better rate than you’d get with a personal loan or credit card. But there’s a trade-off: you’re increasing your mortgage balance and potentially extending how long it takes to pay off your home.
The main difference between a rate and term refinance and a cash-out refinance comes down to purpose. It depends on the homeowner’s financial goals.
A rate and term refinance is about improving the structure of your mortgage. You refinance to get a better interest rate, change the loan term, move from an adjustable rate to a fixed rate, or remove mortgage insurance when you can. You’re not taking cash out beyond minor adjustments. It’s mostly a “clean-up” refinance, focused on saving money month-to-month or paying off the home sooner.
A cash-out refinance, on the other hand, does involve taking money out of your equity. Because it changes the structure of your loan beyond just the rate or term, Texas law treats it differently, which leads us to one of the most Texas-specific aspects of home lending: the Texas (a)(6) loan.
In most states, a cash-out refinance is a fairly straightforward process. But Texas does things differently and proudly so.
The term Texas (a)(6) comes from Article XVI, Section 50(a)(6) of the Texas Constitution. This section outlines how Texans may borrow against the equity in their homesteads. It’s often referred to simply as a “Texas (a)(6) loan” because of that constitutional reference.
These rules are meant to protect homeowners. Texas takes homestead protections seriously, so the state built guardrails around cash-out refinancing. Those guardrails shape how much you can borrow, how fees are handled, and the timing of disclosures and funding. The goal is to give you access to equity, but not in a way that leads to rushed decisions you’ll regret later.
Here are a few of those unique rules:
Those guidelines may seem strict, but they’re part of Texas’s effort to maintain financial protection for homeowners statewide. It’s one of the reasons Texas’s foreclosure rates have historically been lower than in many other parts of the country.
A cash-out refinance is not just about your home value. Lenders look at the full picture: your equity, your credit, your income stability, and your current obligations.
The home must be your primary residence and your homestead, and any existing liens, such as a HELOC, will need to be paid off at closing. Texas also requires a 12-day notice period before closing, and after signing, you have a three-day right of rescission before funds are released. Those pauses are not red tape; they exist to make sure you have time to breathe and confirm the decision fits your life.
One more important detail, in Texas, FHA and VA cash-out programs are not available for homesteads, so most homeowners use conventional cash-out options structured under (a)(6).
Q: How much cash can I take out with a Texas Cash-Out Refinance?
A: You can generally cash out up to 80% of your home’s appraised value, minus what you still owe on your mortgage.
Q: Does a Texas Cash-Out Refinance have higher rates?
A: Typically, yes. Since (a)(6) loans carry more risk to lenders and more legal requirements, they often come with slightly higher interest rates than standard refinances.
Q: Can I refinance my Texas (a)(6) loan later into a regular Rate and Term?
A: Not until the loan is fully paid off. In Texas, once you’ve completed a cash-out refinance, any subsequent refinance on that property remains classified as another (a)(6) loan until the balance is zero.
Q: How long does a cash-out refinance take in Lubbock?
A: Many close in about 30 to 45 days, depending on appraisal timing, title work, and how quickly documents are provided. The 12-day notice and three-day rescission are part of the timeline.
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Thinking about tapping into your home’s equity? Whether you’re looking to renovate, consolidate debt, or fund another major expense, understanding your options and the Texas-specific requirements can help you make a confident, informed decision.
Call us today at (877) 280-4833 to speak with a mortgage professional who knows the Lubbock market and can walk you through the cash-out refinance process. We’ll help you understand how much equity you can access, what the numbers look like, and whether a cash-out refinance aligns with your financial goals. Let’s explore your options together.
