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[RANT] The State of Texas Sucks for Home Refinancing

Discussion in 'BBS Hangout' started by Jeff, Mar 22, 2005.

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  1. Jeff

    Jeff Clutch Crew

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    Please explain to me why Texas is one of the few states in the country that won't allow you to use the equity in your home how YOU see fit. Most states allow you to take home equity loans and lines of credit for 100 percent of the value of the home. Some states even go to 125 percent.

    As far as I can tell, that is all on you and the bank. If you take too much and can't pay, well, that's on you.

    Most states also are allowed to give flexible payment plans - low interest (for a temporary time), interest only, etc. In Texas, you are roped into fixed-rate and fixed-term loans ONLY because of state law, nothing else.

    What the HELL is up with that? It's my house. It's my credit. It's totally on me to pay it back. It is totally on the lender to take the risk. I don't need protecting from myself.

    Damn, it is frustrating. I mean, to go from flexible payment rates to fixed that can change the monthly by hundreds of dollars sucks.

    ...rant over...

    :)
     
    #1 Jeff, Mar 22, 2005
  2. MadMax

    MadMax Member

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    I agree with you. Oddly enough, these restrictions are placed in under the heading of consumer protection.

    Remember, banks are completely evil...at least according to many on this website! :)
     
    #2 MadMax, Mar 22, 2005
  3. Falcons Talon

    Falcons Talon Member

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    Off topic...I just noticed the post count of the Jeff and MadMax.:eek:

    When I grow up, I want to be just like them... :D
     
    #3 Falcons Talon, Mar 22, 2005
  4. SoSoDef76

    SoSoDef76 Member

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    http://www.occc.state.tx.us/pages/brochures/HomeEq.pdf

    "Texans voted to limit the loan amount to 80% to help prevent overextensions of credit and protect our economy during times of economic slowdown."

    Don't hate the state for the state law; hate the people who voted for it. :)
     
    #4 SoSoDef76, Mar 22, 2005
  5. Keiser

    Keiser Contributing Member

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    That 80% crap is a terrible law.
     
    #5 Keiser, Mar 22, 2005
  6. Rocket G

    Rocket G Member

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    I feel your pain.

    What kills me is the insane fees they are charging right now for "closing costs."

    Sorry, but "closing costs" should not come out to anywhere near what they were when I bought the house to begin with!

    I've built equity! ARGGGGGGHHHHH!
     
    #6 Rocket G, Mar 22, 2005
  7. codell

    codell Member

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    The problem is, when you refinance, its essentially like you are buying your house all over again. The loan company has to get their fee (loan origination ...thats how they make their money), plus they have to appraise the house to make sure they are not loaning over 80% of its value, plus the title company gets their fees.
     
    #7 codell, Mar 22, 2005
  8. Jeff

    Jeff Clutch Crew

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    That was because that was the law that was OFFERED to vote on. There was no choice between 80 percent and 100 or 125. There were no variable interest options. It was the legislature that wrote the law for us to vote on.

    I don't have a problem with closing costs. I understand the need for them. People are in business to make money, not go broke. That's fine. What bugs me are the lack of options available to us simply because our state feels the need to protect us from ourselves.
     
    #8 Jeff, Mar 22, 2005
  9. Beck

    Beck Member

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    If you refinance your mortgage with the same lender, do you/can you get a break on any of the closing costs? I am looking to refinance (cash-out) in order to do some home improvements, but I would rather not pay thousands in closing costs once again.
     
    #9 Beck, Mar 22, 2005
  10. bnb

    bnb Member

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    Sooo...

    you can't get a line of credit against your home equity?

    banks are not allowed to offer variable mortgages??

    very crazy...

    never knew the States had that kind of power.

    oh.....and banks *are* evil
     
    #10 bnb, Mar 22, 2005
  11. SoSoDef76

    SoSoDef76 Member

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    The voters could also have voted "no." Numerous laws are voted down and redrafted to conform to the will of the people.
     
    #11 SoSoDef76, Mar 22, 2005
  12. SoSoDef76

    SoSoDef76 Member

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    [duplicate]
     
    #12 SoSoDef76, Mar 22, 2005
  13. Clutch

    Clutch Administrator
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    Not to derail Jeff's thread, but this is somewhat related -- a question I've come across lately is tax values of homes, particularly in how it is related to market value. An unlikely example to prove a point - If a home is appraised at a value like 250K and you buy it for 150K, what is the likely result of an appeal to lower the tax appraisal of your home?

    I know scenarios like that are not likely, but even if it was 250 - 200, I'm curious how strong of an appeal the buyer would have in those cases. Can purchase price have an impact on the tax-appraised value?
     
    #13 Clutch, Mar 22, 2005
  14. codell

    codell Member

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    Clutch,

    It can somewhat, but not likely. The appraised value of your house is not just based on what you paid for it but also what houses around you sold for.

    So even if you paid $150K for a $250K house, if other similar houses in that neighborhood are on record as being sold for $250K, then the county appraiser is likely to take that into consideration.

    Its a good idea to protest anyway. The county appraised our house at $220K last year, and in reality, they were dead on. However, my wife, being a realtor and having access to sold data, purposefuly picked out comparables that really ......well, weren't comparable. She took the "choice" data to the county appraisal district via a protest and the guy pretty much accepted her figures and we got our appraised value down to $184,000, which saved me about $1,000 in taxes.
     
    #14 codell, Mar 22, 2005
  15. RIET

    RIET Member

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    There's a trade off. Texans are lucky to have very strong homestead protection laws. Basically, your house is protected from creditors (except the IRS and the lender) no matter what the circumstance. This is why Texas doctors and attorneys purchase big homes and make huge improvements.
     
    #15 RIET, Mar 22, 2005
  16. RIET

    RIET Member

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    When we bought our Condominium several years ago, our appraised value was higher than our purchase price. We appealed (armed with data) and argued that a legitimate arms length market transaction should dictate the "value".

    We got our tax lowered which was significant because every subsequent year, our assessed value was raised the 10% maximum.
     
    #16 RIET, Mar 22, 2005
  17. Beck

    Beck Member

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    In California, I think homes are appraised at the purchase price for as long as you own it. Someone here may be able to verify.

    In PA, there is a lot of discussion regarding property taxes and assesment. I purchased my home in 2000 for $44,000. Last month, my tax assessment came in at $226,500. I anticipated my assessment going up since we put over $40,000 into the house. However, I am being taxed to rehab this house. It really prevents people from renovating the existing housing stock in the urban areas, where land is more highly priced.

    These re-assessments are happening county-wide and assessed values are up over 35% in my borough. So, this is really a 35% tax hike, even though the millage has remained constant.
     
    #17 Beck, Mar 22, 2005
  18. Clutch

    Clutch Administrator
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    That was terrific information -- exactly what I was looking for. Thanks.

    I've learned a lot about taxes there in the last day or so, particularly with regards to Homestead Exemptions. I always just assumed you were taxed on the full appraised amount, but 20% off is nice on some of the tax lines. I still don't know what the various MUD/PUDs take off on taxes though (whether they take 20% off or tax you on the full appraised amount).

    Got to be careful with schools too. For example, Klein ISD tax rate is 1.7 (now 1.72 I believe), but Cy-Fair's is 1.79 .... but Cy-Fair will take the 20% off while Klein only takes a flat $15K off. So on a $300K home for example, Klein would tax you on $285,000, while Cy-Fair would tax you on $240,000. Despite the higher tax rate, you save over $600 a year.

    Throw in the fact that different neighborhoods vary so much in tax rates, with some at 2.85% and others as high as 3.6% (that I've seen), and it makes a huge difference. A mortgage doesn't concern me as much in Texas... homes are so affordable in comparison to many other parts of the country. But taxes can be killer there.
     
    #18 Clutch, Mar 22, 2005
  19. El_Conquistador

    El_Conquistador King of the D&D, The Legend, #1 Ranking

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    Not to derail, but Jeff, can I assume you are in favor of individual retirement accounts for social security? This argument above would be consistent with that side of the issue.
     
    #19 El_Conquistador, Mar 22, 2005
  20. codell

    codell Member

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    Thats why we live in Cy-Fair. :) Many out here complain about the high ISD taxes, but don't realize what you mention with regards to homestead exemptions.

    As far as I know, homestead exemptions don't apply to MUD taxes (at least, not where we live ......which is a bummer, because our MUD rate out here is higher than the Cy-Fair ISD taxes). Every year, I pay more in MUD taxes than I do in ISD and county taxes combined.


    BTW Jeff ....interest rates are fixin to go up ........
     
    #20 codell, Mar 22, 2005
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