Continuing our series of commonly asked questions, we asked Houston-based Attorney Ambria Wilmore about refinancing a home using the (f)(2) or “conversion” loan option:
Ambria, what options do borrowers have to refinance their home when their existing lien is an (a)(6) home equity loan?
The Texas Constitution only provides two options in this scenario: (1) another home equity refinance subject to all the rules outlined in Article 16 Section 50(a)(6) with or without additional cash taken out, or (2) a rate/term refinance subject to four additional rules—including the proper disclosure of the (f)(2) notice. This second option commonly referred to as a “(f)(2)” loan or a “conversion” loan, has been a popular choice of late given the low-interest-rate environment.
Check back next week for our follow-up question: What are some common questions do you get concerning (f)(2) conversions?