Refinancing, and what Texas does differently

• Changing the terms

  Same debt, restructured — a different length or a different kind of loan. No money comes back to you at closing.

• Taking cash out

  You borrow against the equity and take the difference as cash. This is the one Texas regulates heavily.

On a cash-out refinance of your homestead, Texas caps the loan at 80% of the home's value — and that is 80% counting everything owed against it, not 80% on top of what you already owe.

The cap is written into the Texas Constitution, not set by the lender. It is not negotiable, and nobody can get you around it. Any lender offering to is not doing a Texas home equity loan.

A few other things come with it: a waiting period between applying and closing that cannot be hurried, rules about where the closing physically takes place, and limits on how often this kind of loan can be taken. A cash-out here is a slower, more formal transaction than in most states, and the protections are there for you rather than for the lender.

A refinance is a whole new loan, not an adjustment to the one you have. Most of what you did the first time happens again.

• A new application, new documents, and a fresh underwriting review.
• An appraisal in most cases — the value has to be established again.
• Closing costs, which do not disappear because they are rolled into the loan.
• A new clock, unless the term is deliberately shortened.

That last one gets skipped past. A loan costing less each month but running years longer is not automatically cheaper.

Three things about you, none of which I can guess in advance:

• What your current loan actually is — the real terms, not what you remember.
• How much of the house you own outright.
• How long you plan to stay. A refinance costs money up front; move before that is worked through and it has not paid for itself.

Anybody telling you refinancing is a good idea before knowing those three is not talking about your situation.

• Your current mortgage statement — the real terms.
• The same income and asset paperwork a purchase needs. Same list.
• Your homeowner's insurance details and your most recent tax bill.