Does a cash out refinance loan on homestead property in Texas always involve a home equity loan?

Yes - unless the cash out is for home improvement and you follow those rules

That's what I told the person, but they did not want to believe me. It was just a phone call so I did not want to waste time researching. Thanks for confirming the obvious. I hate it when folks make me question what I already know is true.

what if you have a refi on a homestead with no cash, does TX 12 recission apply?

No. Think about it this way: The legislature wants to give you time (12 days) to think about borrowing money secured by your homestead because the action you are taking could cause you to lose your house. A refinance is not borrowing money secured by your homestead, it is merely a refinance of borrowed money secured by your homestead. You already could lose your house because of these borrowed funds, so you don't need time to think about it.

So if the refi is solely for payment of owelty and no cash out to the borrower, will this loan fall outside the 50(a)6 category?

You need to read all of Section 50(a) for your answer:

(a) The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for:
(1)* * *
(2)* * *
(3) an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding;


An owelty is a legal fiction. Husband and wife are divorcing so it is decided that he gets the house (homestead) and she will relocate. They have paid on the mortgage all those years and she wants to "cash out" her equity. But suppose the husband has no cash to give her. He must get a loan, but except for the owelty provision (and perhaps a home equity lien), there is no category under which he can grant a lien on the entire property to secure the cash out; it is purchase money as to her one-half, but not his one-half. Through the owelty fiction, he can place a valid lien on both halves of the property.