If you have lived in your Lufkin home for a few years, it has quietly built up equity while you were busy living your life. You may need to renovate your kitchen, consolidate high-interest debt, or cover an unexpected expense. A cash-out refinance might be what you’re looking for. It lets you tap into that value and turn it into something tangible, whether paying off debt, repairing the house, or planning for your family’s future.
In Texas, cash-out refinancing for a primary residence is subject to specific constitutional guidelines, often referred to as Section 50(a)(6). These rules are designed to protect homeowners while still allowing you to access your equity.
One important limit is the 80 percent loan-to-value cap. Your new mortgage cannot exceed 80 percent of your home’s appraised value. You must keep at least 20 percent equity after closing. Texas also requires a 12-day notice before closing and a three-day right of rescission after signing. This pause protects you and gives time to confirm that the decision feels right.
These guardrails may feel strict at first, but they protect people from rushing into decisions they might regret.
A rate and term refinance is a “tune-up” for your existing mortgage. You replace your current loan with a new one that has a different interest rate, term, or both. You do not leave closing with a big check. The goal is better payment terms, greater stability, or a faster payoff, not extra cash.
A cash-out refinance changes that. You take out a new mortgage for more than you owe and receive the difference in cash at closing. Your existing loan is paid off, and you start fresh with a new one that includes the cashed-out amount.
If you want a better rate or a different term, that is rate and term. If you want to tap into your equity to tackle projects, pay off debt, or handle major expenses, that is cash out.
Cash-out refinances have stricter requirements than rate and term refis, so let’s go through what you’ll need to qualify.
Most lenders want you to keep at least 20% equity after the cash-out. Some programs allow 10% or 15%, but you will pay a higher rate or need mortgage insurance.
You'll generally need a credit score of at least 620, though 680 or higher will get you better rates. The stronger your credit, the more favorable your terms will be.
Lenders want to see that you can handle the new, larger monthly payment. They'll verify your employment, income, and work history. If you're self-employed, expect to provide tax returns for the past two years.
Your total monthly debt payments, including the new mortgage, usually cannot exceed 43% to 45% of your gross monthly income. Some lenders are more flexible, but manageable debt is important for approval.
You'll need a current appraisal to determine your home's market value. This is how lenders calculate how much equity you have and how much you can borrow. If your home's value has increased since you bought it, this works in your favor.
Most lenders require that the property be your primary residence, though some allow cash-out refis on second homes or investment properties with different terms.
The process takes about 30 to 45 days from application to closing, similar to your original mortgage. Closing costs typically equal 2% of the new loan amount, though you can sometimes roll them into the loan.
Everyone’s story is a little different, but common themes emerge when Lufkin homeowners discuss why they considered a cash-out refinance.
Sometimes the benefit is peace of mind. Building a financial cushion for unexpected medical expenses, job changes, or family needs can relieve stress that is hard to measure but easy to feel. Ideally, you use the money for something that improves your long-term situation, whether it’s your home, your debt picture, or your family’s stability.
Q: How much cash can I take out of my Lufkin home?
A: In Texas, your new loan cannot exceed 80 percent of your home’s appraised value. The amount you can access depends on that value, your current loan balance, and closing costs.
Q: Is a cash-out refinance better than a home equity loan?
A: It depends on your goals. A cash-out refinance replaces your entire mortgage. A home equity loan adds a second loan on top of your existing one. Many homeowners prefer having a single payment.
Q: Will my interest rate be higher with a cash-out refinance?
A: Cash-out rates are often slightly higher than rate and term refinances, but the exact rate depends on your credit, equity, and market conditions.
Q: How long does the process take in Lufkin?
A: Most cash-out refinances close within 30 to 45 days, depending on appraisal timing and how quickly documentation is provided.
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If you wonder whether a cash-out refinance makes sense for your situation, you do not have to guess or run the numbers alone. Talking with someone who understands the loan guidelines and the Lufkin market can clarify the decision.
Call us at (877) 280 4833 to connect with our mortgage professionals who can walk you through your options, show you how much equity you can access, and help you decide whether a cash-out refinance is the right move for you and your home.
